Pension Reform Plan Moves Forward In House

Changes will only affect new employees hired by the State of Tennessee

Legislation proposed earlier this month to reform the state’s pension plan, the Tennessee Consolidated Retirement System (TCRS), passed out of the House State Government Committee this week with full support from Republican lawmakers. The legislation represents a proactive approach by State Treasurer David H. Lillard and House Republicans to ensure the security of pension benefits for current employees, retirees, as well as future employees that will be hired in years to come.

The proposed changes, which would only affect new employees hired on or after July 1 of 2014, would change the current defined-benefits system to a hybrid plan that includes elements of defined-benefits and defined-contribution programs. A defined-benefit plan guarantees retirees a fixed pension benefit based on their years of service and earnings, while defined-contribution plans do not have guaranteed payment levels but rather specified contribution levels by the employer.

The pension changes, when passed by the legislature, will not affect anyone that is currently a state employee, a teacher, a higher education employee, or an employee of a local government participating in the Tennessee Consolidated Retirement System.