Some top Tennessee officials say they don’t expect the Legislature to address state employee pension reform at all this year — although retirement plans for some 483 local government groups might get a look.
“There will probably be some bills filed this year, everybody sort of getting on that bandwagon, like, ‘Oh, hey, we just discovered, you know there’s a pension issue,’” said Senate Majority Leader Mark Norris, R-Collierville. “There’s long been a pension issue. But it takes studied work, and it’s technical stuff.”
Lawmakers will be ready to tackle pensions for state employees, including teachers and workers in higher education next year, he told TNReport. That’s just four years before about 16 percent of state workers will qualify for retirement, according to state officials.
Tennessee has fared well compared to other states in terms of funding its pension system — an issue that has captured recent national attention. A recent Pew report found that the state’s pension system was 90 percent funded in the last two fiscal years, well above a widely used 80 percent threshold to measure the soundness of pension plans. By contrast, the plan in Illinois was funded at 51 percent in 2009, a stark reminder that many states have failed to set aside enough money to cover their promised pension payments.
Norris said he is unsure what the future holds for revamping the state’s retirement system but said lawmakers should give serious thought to adopting a program that mirrors a 401(k) matching system, much like what is used in the private sector.
For now, the plan is to target future municipal employees because local governments are “under greater cost pressures than the state is,” Treasurer David Lillard told lawmakers at the Council on Pensions and Insurance meeting Monday.
He is proposing offering those cities, counties, and school districts a variety of adjustments such as changing the retirement age, capping cost-of-living adjustments, capping maximum benefits or pairing supplemental deferred compensation plans with reduced pension benefits. Any changes need to be OK’d by the Legislature and the governor.
His plan would not affect state employees, K-12 teachers, higher education workers or current retirees, he said.
The state runs the Consolidated Retirement System, which handles pensions for those workers as well as the plans issued by some cities and towns.