PUTNAM COUNTY, TN — The county may be changing its retirement plan, which would affect future employees.
During Monday’s fiscal review committee meeting, commissioners discussed a recommendation from the pension review committee to replace the county’s existing Tennessee Consolidated Retirement System local government plan, which has been in place since 1989, with a new hybrid plan.
District 2 commissioner Bob Duncan Jr., who is on both committees, said the plan “is going to be a combination of the retirement benefit plan we have now and a mandatory defined contribution plan that’s similar to a 401k.”
If adopted, the hybrid plan will only affect employees hired after its enactment, while previously hired employees would stay on the current one.
Mike Medley, District 7, wanted to know why the county should change plans.
“Why are we looking to change this, the option we’ve got now, after it’s been in place this long?” he asked.
Duncan said most private companies and governments are moving away from the current pension type of plan because it is unsustainable.
“This will not result in any immediate savings to the county, but it will result in savings to the county 10, 15, 20, 30 years down the road,” he further explained. “Most corporate plans are no longer under a defined contribution plan strictly.”
According to the committee, one advantage of moving to the hybrid plan for the employee is the defined contribution portion is controlled by the employee, who can make more investment decisions into the 401k portion. With the hybrid plan, the employee can choose how and where they want money to go.
Retirement age would be affected too. The current regular plan (and not the bridge plan) calls for 30 years of service to retire at any age and a retirement age of 60 with a minimum of 10 years with no reduction, according to TCRS. Retiring any less would reduce benefits. The new plan, however, would use a Rule of 90,which means an employee retires based on a combination of age and years of service adding up to 90 for retirement without reduction in benefits.
Also according to the committee, an employee advantage is the 401k portion’s portability — the employee can take the plan with them upon quitting or termination.
With the current plan, the county matches 10.23 percent for regular retirement and around 13 percent for the recently adopted retirement bridge plan, which is for law enforcement firefighters. With the new plan, the county would be capped out at 9 percent. Changing to the hybrid plan would not affect the retirement bridge plan.
The pension review committee hopes to have the item up for vote during next month’s full county commission meeting. Reportedly, the issue was brought up this month so commissioners can have time to review the proposed changes.
The full county commission will further discuss the retirement plan when it meets Monday at 6 p.m. in commission chambers at the Putnam County Courthouse. The public is invited to attend.