Update on the Proposed Hybrid Pension Plan
Earlier this afternoon, TSEA met with Tennessee State Treasurer David Lillard to communicate our concerns about the proposed new Hybrid Pension Plan for state employees, higher education, and teachers (The treasury’s new proposed plan, if passed, would only apply to state employees, higher education employees, and teachers entering the system for the first time on or after July 1, 2014).
The Treasurer’s new proposed hybrid plan is both a Defined Benefit (DB) plus a Defined Contribution (DC) plan. Current state employees are non-contributory, which means they are not required to contribute to the retirement system to receive a benefit. Under the DB side of the hybrid plan, state employees would contribute 5% of salary and the state would contribute 4% of payroll. On the DC side, state employees would contribute 2% of salary, with an opt-out feature, and the state would contribute 5% of salary.
Other facets of the new plan include a provision that changes retirement eligibility requirements from the earlier of 30 years of service or age 60 (current rule), to age 65 and 5 years of service or the Rule of 90 (i.e. age plus years of service equals 90), a reduction in the annual service accrual multiplier for state employees from 1.575% (current plan) to 1.0%, and a list of employer cost and unfunded liability controls that would engage should unfunded liabilities exceed 4% of payroll for the DB component of the plan.
This week, the Executive Committee of TSEA’s Board of Directors approved an alternate plan that was presented to the Treasurer during today’s meeting. Mr. Lillard said he would review our alternative plan and provide a reply as soon as possible. We will keep you updated on the progress of this legislation and provide you the details of our alternate plan next week.
The Treasurer’s Hybrid Pension Plan will be presented to the Council on Pensions and Insurance on Monday, March 4th. TSEA will be in attendance and will have the opportunity to give our input and relate our suggested changes during the hearing.
Status of TSEA Legislation
Relief for Parking Fees for Higher Education Employees – HB1306 (Windle) / SB 1369 (Tate)
This bill has been placed with the House Education Subcommittee and will be heard on Tuesday, March 5th at 3:00 PM.
Death Benefits for Non-Contributory TCRS Members – HB0545 (Harrison) / SB1351 (Yager)
TSEA is in discussion with the Treasurer and other Legislators to have this bill included as part of the Administration’s Pension Reform Bill.
State Employees, Not Contractors – HB1052 (Jernigan) / SB1188 (Niceley)
TSEA and Legislative sponsors are in the process of setting up a meeting with all independent lobbyists that have opposition to this bill to discuss prior to putting it on notice. In addition, TSEA has given the bill directly to Governor Haslam and asked for the Administration to review it, and if they are unable to support it, to give us suggestions regarding what they can support.
State Employees as Election Officials – HB0578 (T. Hill) / SB0873 (Crowe)
This bill is currently on the calendar of the Senate State & Local Government Committee for Tuesday, March 5th at 10:30 AM and the House Local Government Sub Committee for Wednesday, March 6th at 12:00 PM.
Retiree/Spouse Tuition Discount – HB0887 (Hawk) / SB1164 (Hensley)
This bill was heard by the House Education Subcommittee on Tuesday, February 26th, with sponsor Representative David Hawk and TSEA’s Government Affairs Director Sarah Adair on hand to present the bill. The bill was passed unanimously to the full House Education Committee and will be heard on Tuesday, March 5th at 12:00 PM.
As a reminder for 2013, Legislative Updates are intended for informative purposes whereas Legislative Alerts urge you, our members, to take action