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.”


Baker Donelson Earns Top Marks In 2017 Corporate Equality Index

Baker Donelson received a perfect score of 100 percent on the 2017 Corporate Equality Index, a national benchmarking survey and report on corporate policies and practices related to LGBT workplace equality, administered by the Human Rights Campaign Foundation. Baker Donelson joins the ranks of 517 major U.S. businesses that also earned top marks this year.  "Baker Donelson ... (click for more)

More Than $1.5 Million In Water And Wastewater Construction Loans Awarded

Tennessee Governor Bill Haslam and Tennessee Department of Environment and Conservation Commissioner Bob Martineau announced that one community and one Utility District have been approved to receive more than $1.5 million in low-interest loans for water and wastewater infrastructure improvements. “One of the ways we can continue to make our communities great places to live is ... (click for more)

Lawsuit Says Girl Received Severe Traumatic Brain Injury In Woodmore Bus Wreck

A new lawsuit in the tragic Woodmore Elementary School bus wreck said one girl on the bus suffered a severe traumatic brain injury. Attorneys Joseph Fried and Michael Goldberg of Fried Rogers Goldberg LLC filed a lawsuit in Hamilton County Circuit Court on behalf of the minor daughter of Shanquatta Byrd. The bus driver, Johnthony Walker, was transporting 37 students from ... (click for more)

Officer Who Was Shot Returned Fire; Is Recovering Well; Shooter Still On Loose

Chattanooga Police Chief Fred Fletcher said Monday morning that the officer who was shot three times on Thursday is recovering well.   Chief Fletcher said the officer was wearing a bullet-proof vest and one bullet hit the vest, which protected him during the shooting.  The officer was able to return fire, although Chief Fletcher would not comment on how many bullets ... (click for more)

Signal Mountain Couldn't Manage Public Education

I have been reading the buzz about Signal Mountain and other small municipalities considering a move to form their own school district within their municipal boundaries.  It is quite the comedy hour considering the notion that small cities that for decades could not even manage small sewer systems or 911 districts, are somehow going to do a better job with public education ... (click for more)

Roy Exum: Abolish Bail For Poor

Our terribly overcrowded Hamilton County Jail may get some help from an unsuspected corner – the Obama administration is tackling the fact that right now over 450,000 people are in our country’s jails because they are too poor to pay for bail. It is a violation of the Constitution to “punish people for their poverty.” As the Eighth Amendment provides, “… excessive bail ought not ... (click for more)