The Tennessee Consolidated Retirement System (TCRS) has once again been recognized nationally as one of the best-funded state pension programs in the country. In a recent report, Pew Charitable Trusts, a nonprofit focused on non-partisan government research, listed Tennessee, along with New York and South Dakota, as best prepared to fulfill pension promises made to public employees.
TCRS is the defined benefit pension plan serving over 369,000 active and retired state, higher education, and participating local government employees, as well as K–12 public teachers. Administered by the Tennessee Department of Treasury, TCRS provides a lifetime retirement, and survivor and disability benefits for employees and their beneficiaries.
In its latest State Pension Funding Gap Report, Pew points out that as policymakers deal with the economic challenges of the COVID-19 pandemic, policies on pensions will play an important role in determining how well states are able to weather an economic downturn. The report identifies the good practices Tennessee has historically followed to protect its pension, such as lowering investment return assumptions, adopting cost-sharing policies, and fully funding the actuarially determined contribution. The findings are based on trends since before the Great Recession, as well as over the five-year period since 2014.
Pew recognizes Tennessee for the adoption of the Hybrid Plan with Cost Controls established through legislation passed by the Tennessee General Assembly in 2014. As stated in the report, Tennessee enjoys “steady and consistent budget costs over the five-year time horizon while remaining at or near full funded status.” The report further states that Tennessee is one of “three states … in which funded status remained above 90% while pension contribution rates varied by less than 1% of payroll.”
“My primary focus as Treasurer is protecting the retirement of our teachers, state government employees, local government employees, police officers and firefighters, and others who have dedicated their lives to serving Tennessee,” said State Treasurer David H. Lillard., Jr., who also serves as Chair of the Board of Trustees for TCRS. “I am extremely proud of this achievement and the work Tennessee does every day to protect the retirement of those who serve the public in Tennessee.”
Treasurer Lillard points to the sound financial management and proactive investment management as the source of its success. In the last fiscal year, the Tennessee Consolidated Retirement System paid $2.75 billion in benefits to 146,382 retirees across the state. The retirement benefits paid by TCRS have an economic impact in all 95 counties.
PEW bases its reporting on data provided by each of the state pension plans. TCRS recently completed the Comprehensive Annual Financial Report (https://t.e2ma.net/click/t6h12f/5n7lps/h54on7), which provides a financial overview of our state’s retirement system. The report is provided annually to the Government Financial Officers Association to present a clear picture of financial health of the pension.
The Tennessee General Assembly has consistently voted to fully fund the actuarially determined contribution – a key factor in Pew’s recognition of successful public pension plans.
To read more on public pension funding throughout the country, visit the Pew Charitable Trusts research (https://t.e2ma.net/click/t6h12f/5n7lps/xx5on7) website.
