Lillard Recommends Reforms To State Pension Plan

Tuesday, February 26, 2013

State Treasurer David H. Lillard, Jr. is recommending that the General Assembly adopt a number of reforms to the state’s retirement plan for public employees. The Tennessee Consolidated Retirement System (TCRS) is a well-funded pension plan.  The proposed changes will only apply to state employees, higher education employees, and teachers hired on or after July 1, 2014 and will ensure the continued financial strength of the TCRS. The bill will not affect the retirement benefits for current state employees, higher education employees, or teachers. 

“I want to stress that the changes I am recommending would not affect eligibility or benefits for employees or retirees who are already part of TCRS,” Treasurer Lillard said. “In fact, making these changes will help ensure that TCRS remains financially secure to honor the commitments made to those employees and retirees.”

Because pension plans carry costs and liabilities that stretch over many decades, Treasurer Lillard said it is important to look well into the future when evaluating a plan’s financial health.

“Let me be very clear: TCRS is in good financial shape right now, just as it has been for many decades,” Treasurer Lillard said. “That’s attributable to a number of factors, including the General Assembly’s commitment to ensuring TCRS is adequately funded, an effective investment strategy and fair but conservative benefit payouts. However, it is important to take a long view when trying to anticipate what a retirement plan’s future costs will be. Based on the actuarial projections and other information my staff and I have studied, we believe changes are needed now to protect taxpayers, employees and retirees in the future.”

Treasurer Lillard presented the General Assembly’s Council on Pensions and Insurance with proposed legislation Monday that, if adopted, would implement his recommendations. He is scheduled to have a more detailed discussion with council members during a follow-up meeting March 4.

The changes he is proposing would limit the state’s future liability for pension costs by creating a hybrid between a defined benefit plan, which guarantees specific payouts to retirees based on a formula, and a defined contribution plan, in which the state would provide fixed amounts of money to employees’ 401(k) or similar types of accounts.

The reforms would also reduce pension costs by adjusting the formula used to calculate retirement benefits, raising eligibility requirements and collecting employee payroll deductions.  The new plan will also have cost controls that will apply only if the plan’s total costs exceed certain thresholds.

“In 2003, state taxpayers were spending about $264 million annually to support the pension system,” Treasurer Lillard said. “That number had grown to $731 million last year. Based on projections we have seen, the cost could go up by one-third or more over the next 10 years if changes aren’t made, which would push the taxpayers’ total annual expense above $1 billion.”

For further information, go to www.treasury.tn.gov/tcrs and select the tab titled “Proposed State and Teacher Plans.”


Tennessee Supreme Court Clarifies Standard Of Appellate Review

The Tennessee Supreme Court, in a unanimous opinion, clarified the standard of appellate review for a trial court’s decision regarding judicial diversion. When a case is appealed, the court must determine what standard of review applies. In this case, the defendant argued that the Court of Criminal Appeals used the wrong standard when reviewing the trial court’s decision ... (click for more)

Special Supreme Court Denies Hooker's Petition To Rehear

The Tennessee Special Supreme Court has issued an order denying John Jay Hooker’s Petition to Rehear the case in which he challenged the constitutionality of the state’s judicial selection process. Mr. Hooker filed the petition with the Court March 27, seeking a rehearing on the issue of the constitutionality of the Judicial Nominating Commission (JNC) under the Tennessee ... (click for more)

Catoosa Man Convicted Of Sexual Abuse Of 5 Young Girls Gets Life Plus 250 Years

A Catoosa County man convicted of the sexual abuse of five young girls and possession of child pornography has been sentenced to life plus 250 years. James Martin Ferris, 34, was found guilty after a recent trial. The day after his conviction, Judge Ralph Van Pelt set the sentence. Ferris on June 5, 2013, was indicted by the Catoosa County Grand Jury on 46 counts.   ... (click for more)

Rev. Jesse Jackson To Be Guest Speaker At City-Wide Peace And Love Rally On Friday

Rev. Jesse Jackson will be the speaker at the City Wide Peace and Love Rally at Olivet Baptist Church, 740 East ML King Blvd.,  on Friday, from 5:15-7 p.m. Rev. Jackson is the founder and president of Rainbow PUSH Coalition. Cedric Pendleton, actor and humanitarian with Have and Have Nots/House of Payne/Fantasia Story, will be the special guest. (click for more)

Use The Current Rail System Already In Place - And Response

Why spend $20 million or more on an unproven system to run from the Southside of Chattanooga when we already have the beginnings of a system?  The question apparently has surfaced of why the Choo Choo City doesn't have a rail line. We do have a rail line with the Tennessee Valley RR Museum and their hardware. And they already make runs from the Southside to close to Enterprise ... (click for more)

Roy Exum: UAW Voices In Detroit

Today we are going to eavesdrop on somewhat of an open conversation that was held far to the north after the United Auto Workers surprisingly dropped a legal challenge with the National Labor Relations Board in Chattanooga the first thing on Monday morning. The NLRB judge certified the VW workers’ February vote to turn away the UAW at Chattanooga’s Volkswagen manufacturing plant ... (click for more)