Some want TN to begin traditional retirement plans - WSMV Channel 4

Some want TN to begin traditional retirement plans

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It is the fastest growing section of the state budget, even faster than TennCare. But it's an item that is almost never discussed - the state's massive pension plan that some call unfair to every non-state worker in Tennessee.

Pension costs in Tennessee have tripled over the past 10 years, so who is ponying up and paying this added cost for state pensions?

You are, the Tennessee taxpayer.

The state of Tennessee guarantees its workers a pension, so whether investments go well or go poorly it doesn't matter to the state worker. The pension is guaranteed, and the taxpayer will pay the different.

"So you really have two classes of citizens now. You have a government employee that has a really nice pension plan. They don't have to worry about the stock market going up and down," said Ben Cunningham, spokesman for Tennessee Tax Revolt.

And if it does go down, it's a double whammy to the taxpayer.

"The poor taxpayer not only has to increase the funding to his own pension, he has to pay more taxes to the state so the government employees can have their defined benefit plan," Cunningham said.

Cunningham and Tennessee Tax Revolt have a simple solution: move future state employees to a classic 401k, where the state matches contributions, but promises nothing.

And don't think this hasn't come up before.

State Treasurer David Lillard runs the state's pension plan. He will tell you right now the state contributes 15 percent of a state worker's salary to his retirement.

That's a lot of money, and if the market yields less than 7.5% interest a year, it will go up.

"The market currently is a concern, the kind of volatility we now have. Pension plans have to be run through the long term. You can't run them on a short-sighted yield, and that's an extreme concern," Lillard said.

To change pensions, it would take legislative action, and right now there is nothing in the works. It is a proposal that will meet the full wrath of public employee unions and so it is almost never discussed.

"We've all been kind of hiding our heads in the sand, both the politicians and the taxpayers, because these costs haven't been obvious, and they haven't been clear in terms of the overall budget," Cunningham said. "But now they are so huge, and they're beginning to become such a big part of the budget, we've got to deal with them."

Of course, no one is talking about taking away benefits already earned. The idea at the state and local level is to begin traditional retirement plans with new employees.

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