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TennesseeSB 0510114th General Assembly (2025-2026)SenateWALLET

AN ACT to amend Tennessee Code Annotated, Title 8, Chapter 25; Title 8, Chapter 34; Title 8, Chapter 35; Title 8, Chapter 36 and Title 8, Chapter 37, relative to retirement.

Sponsored By: Sponsor information unavailable

Signed by Governor

Pensions and Retirement Benefits

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Bill Overview

Analyzed Economic Effects

15 provisions identified: 5 benefits, 1 costs, 9 mixed.

Hybrid workers get employer retirement deposits

Employers must put 5% of each participating hybrid-plan worker's salary into the plan's retirement savings account. This applies even when the worker contributes nothing. For K–12 teachers, the local education agency pays this amount in addition to any applicable match. Local governments adopting the hybrid plan can also contribute to additional 401(k), 403(b), 457(b), or 457(f) plans. Federal tax limits and retirement-plan rules apply.

County and city officials join retirement

Full-time county judges and officials taking office beginning July 1, 2025, must join if their county participates. Full-time city judges and attorneys serving on or after that date must join if their city participates. They receive benefits and contribute on the same basis as other local employees; local governments pay coverage and administrative costs. County officials taking office since July 1, 2018, who are current or former members also generally must join. That rule exempts officials already in office when the county joined, except members of a closed earlier county pension plan. City judges and attorneys participating separately before July 1, 2025, continue under city authorization.

Election commissioners get new pension rules

Current or former State Election Commission members with at least five years of service qualify for retirement membership. Members taking office beginning July 1, 2025, must join; earlier officeholders are eligible under the law's rules. Members covered by the election rule, without maintained prior state or teaching membership, make a final participation choice after five years. That choice is due on the first day after completing five years. Benefits use the Group 1 formula, not the minimum allowance, subject to statutory limits. Commission service is counted separately from other service when calculating average final pay.

More public officials must join retirement

Beginning July 1, 2025, people taking covered public positions generally must join Tennessee's retirement system, subject to a statutory exception. This includes new state judges, district attorneys general, and lawmakers; membership can require paycheck contributions. Earlier final participation or nonparticipation choices remain binding, including protected opt-outs when officials return to listed offices. Officials who took those three state roles during July 1, 2016–June 30, 2025, without maintained prior membership had a final hybrid-plan choice. Current or former members taking otherwise optional positions during July 1, 2018–June 30, 2025, must join the hybrid plan. The latter rule exempts retirees returning under the law's listed return-to-service provisions.

Part-time public workers get default retirement

Beginning July 1, 2025, newly hired, covered part-time state workers and teachers join Tennessee's retirement system by default. Part-time local workers also join if their employer participates and allows part-time coverage. Workers can opt out in writing within 30 calendar days after their first workday; that choice is final. Students, seasonal or temporary workers under 25, temporary higher-education workers, and most substitute teachers are excluded. Contracted substitutes scheduled like regular teachers can qualify; higher-education workers certified as teachers may qualify for an optional retirement plan. Membership can require contributions from pay.

State workers get matching retirement money

Beginning July 1, 2021, participating state workers get a dollar-for-dollar employer match on their monthly retirement-plan contributions. The match covers up to $50 per month. The annual state budget can set a higher monthly maximum.

Tax-offset pay counts toward worker pensions

Tennessee retirement calculations count payments made to offset tax bills or repay withholdings required by state or federal law. These payments are included in the pay used to calculate retirement benefits. The effect on a worker's pension depends on their pay and benefit formula.

Local board members gain retirement coverage

Covered local board members taking office beginning July 1, 2025, must join retirement when their employer authorizes participation. Earlier officeholders are eligible under these rules. Covered boards handle duties such as rates, permits, professional regulation, advice, studies, or planning. Approval requires a two-thirds vote of the local legislative body, acceptance of liability, and coverage of all nonparticipating departments and agencies. Eligible members can buy earlier service credit by meeting statutory requirements and paying required employee contributions plus interest in a lump sum.

Retirees gain new survivor payment choices

New Options 5 and 6 give retirees a lower lifetime payment in exchange for survivor income. After the retiree dies, the named beneficiary receives 70% of the retiree's payment rate for life. Under Option 6, if the beneficiary dies first, the retiree's payment returns to the amount payable without that option. The retiree must file a written beneficiary designation at retirement that the retirement board acknowledges.

Retirement overpayments face collection or waiver

Tennessee's retirement system can recover mistaken payments from members, beneficiaries, or others not entitled to the money. Methods include bank recovery, reduced benefits, repayment agreements, collection agencies, estate claims, lawsuits, and methods approved by the state treasurer. Participating employers must carry out requested payroll deductions when an overpaid member returns to covered work. The system can establish repayment waivers consistent with its duty to members and federal guidance; relief is not guaranteed. Recovery cannot be waived for overpayments caused by violating federal compensation or annual benefit limits.

Retirement payments get mandatory start deadlines

Retirement payments must start by the later of two dates: April 1 after the applicable age year or service-ending year. The age is generally 70½, or 72 for people born on or after July 1, 1949; federal law can change it. Without an application, the system starts payments unless the member selected an allowed beneficiary allowance of equal actuarial value. Contributions must be refunded if a former member missed that application deadline, has been away over seven years, and lacks retirement eligibility. The refund is due within 90 days after the board is notified of those facts.

Members gain SIMPLE retirement account rollovers

Tennessee retirement-system members can roll money from a qualifying SIMPLE IRA into the retirement plan. At least two years must have passed since the first contribution to that account.

Retirees gain limited beneficiary change options

Retirees without an optional payment plan can change beneficiaries by filing a properly signed written designation. Those with an optional payment plan generally cannot change beneficiaries after retirement. They can cancel a designation after the beneficiary's death or divorce, with written requests and required documents. Divorce cancellations cannot conflict with the divorce agreement or court order; the law also allows replacement beneficiaries for limited remaining payments. After cancellation involving a sole beneficiary, a retiree who marries can name the new spouse as sole beneficiary. Future joint-and-survivor payments are recalculated to preserve their actuarial value, using both people's ages.

Returning retirees face employment restoration rules

Retirees taking part-time work with a participating employer are treated as restored to employment under Tennessee's retirement rules. This applies even when they cannot qualify for retirement-system membership. The provision does not state a specific benefit reduction or suspension.

Public retirement plans face approval checks

Participating public employers need the retirement-system director's approval for tax-deferred retirement plans that include employer contributions. Local defined-benefit plans established and maintained before May 17, 2023, can remain outside the statutory public employee retirement-system definition. Combined employer and employee contributions must not exceed 7% of salary, and supplemental benefits must meet statutory limits. At the retirement system's request, these local governments must arrange and pay for periodic audits by an auditing or accounting firm.

Sponsors & Cosponsors

Sponsors

There is no primary sponsor on record.

Cosponsors

There are no cosponsors for this bill.

Roll Call Votes

All Roll Calls

Yes: 132 • No: 0

House vote • 4/16/2025

FLOOR VOTE: REGULAR CALENDAR PASSAGE ON THIRD CONSIDERATION 4/16/2025

Yes: 93 • No: 0

Senate vote • 4/7/2025

FLOOR VOTE: as Amended Third Consideration 4/7/2025

Yes: 32 • No: 0

Senate vote • 4/1/2025

SENATE STATE & LOCAL GOVERNMENT COMMITTEE

Yes: 7 • No: 0

Actions Timeline

  1. Effective date(s) 05/05/2025

    5/13/2025

  2. Pub. Ch. 367

    5/13/2025

  3. Signed by Governor.

    5/5/2025Senate

  4. Transmitted to Governor for action.

    4/23/2025Senate

  5. Signed by H. Speaker

    4/22/2025House

  6. Signed by Senate Speaker

    4/22/2025Senate

  7. Enrolled and ready for signatures

    4/22/2025Senate

  8. Passed H., Ayes 93, Nays 0, PNV 0

    4/16/2025House

  9. Am. withdrawn. (Amendment 1 - HA0088)

    4/16/2025House

  10. Subst. for comp. HB.

    4/16/2025House

  11. Rcvd. from S., held on H. desk.

    4/9/2025House

  12. Engrossed; ready for transmission to House

    4/7/2025Senate

  13. Passed Senate as amended, Ayes 32, Nays 0

    4/7/2025Senate

  14. Senate adopted Amendment (Amendment 2 - SA0316)

    4/7/2025Senate

  15. Senate adopted Amendment (Amendment 1 - SA0314)

    4/7/2025Senate

  16. Placed on Senate Regular Calendar for 4/7/2025

    4/4/2025Senate

  17. Recommended for passage with amendment/s, refer to Senate Calendar Committee Ayes 7, Nays 0 PNV 0

    4/1/2025Senate

  18. Placed on Senate State and Local Government Committee calendar for 4/1/2025

    3/26/2025Senate

  19. Action deferred in Senate State and Local Government Committee to 4/1/2025

    3/25/2025Senate

  20. Placed on Senate State and Local Government Committee calendar for 3/25/2025

    3/19/2025Senate

  21. Action deferred in Senate State and Local Government Committee to 3/25/2025

    3/18/2025Senate

  22. Placed on Senate State and Local Government Committee calendar for 3/18/2025

    3/11/2025Senate

  23. Action deferred in Senate State and Local Government Committee to 3/18/2025

    3/4/2025Senate

  24. Placed on Senate State and Local Government Committee calendar for 3/4/2025

    2/25/2025Senate

  25. Passed on Second Consideration, refer to Senate State and Local Government Committee

    2/12/2025Senate

Bill Text

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