A new retirement system being contemplated by the Tennessee legislature would require new state employees and school teachers to potentially work more years. And their guaranteed money would be cut by roughly a third.
State Treasurer David Lillard says change is necessary because any new hires are adding to the state pension’s unfunded deficit. His plan would move to what’s known as a hybrid pension system, which has been adopted in states like Georgia and Virginia. It shifts more of the responsibility of saving for retirement to individuals in an effort to decrease the state’s exposure to volatility in the stock market.
However, the new retirement plan would include some guaranteed money, which Lillard says is important.
“We do believe that in order to get an employee a much better opportunity to have a truly sufficient benefit, you need a floor, basically,” says the Tennessee Treasurer.
Lillard’s pension changes raise the retirement age by five years and make all state workers contribute 5 percent of their income into the program. Currently, only public school teachers have been required to pay in to get their retirement benefits.
If approved by the legislature, the changes would apply to state employees, teachers and higher education officials hired after July 1, 2014.
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