Public pensions in Tennessee

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Tennessee information (2016)

Total contributions: $1,779,692,000

Employee contributions: $362,971,000

Government contributions: $1,416,722,000

Total payments: $3,280,554,000

Total cash and investment holdings: $53,042,292,000

Number of state and local pension systems: 41

Active membership: 401,425

Inactive membership: 149,282

Key terms

Actuarial value of assets (AVA)The value of the assets in a pension plan, which include investment gains and losses.

Unfunded actuarial accrued liability (UAAL)The difference between the total value of assets and the actuarial accrued liability. In other words, it is the difference between what is owed to all beneficiaries enrolled in a pension plan and what funds are available to pay out to both current and future beneficiaries.

Annual required contribution (ARC)An annual expense employers pay towards a pension plan that is made up of two parts: the "normal cost," or the amount paid towards the liabilities of the previous year, and an additional cost that attempts to pay for liabilities that have not yet been met.

Discount rateA rate that can be used to determine how much money is needed at one point to earn a certain amount in the future. The discount rate is therefore similar to an interest rate. • Funded ratioA number used to describe how fully a pension plan is funded. This ratio is determined by dividing net assets by accrued liabilities.

Rate of returnThe ratio of money earned or lost on an investment relative to the amount of money invested. • Active memberA member of a pension plan either receiving benefits or making contributions.

Inactive memberA member of a pension plan no longer contributing and not yet receiving benefits from that plan. • OPEBAn acronym for "other post-employment benefit." These benefits refer to non-monetary pension benefits such as health or life insurance.

Hover over the above terms for definitions.

Note: This page utilizes information from a variety of sources. The information presented on this page reflects the most recent data available as of August 2017.

Tennessee public pensions are the state mechanism by which state and many local government employees in Tennessee receive retirement benefits.

According to the United States Census Bureau, there were 41 public pension systems in Tennessee as of 2016. Of these, two were state-level programs while the remaining 39 were administered at the local level. As of fiscal year 2016, membership in Tennessee's various pension systems totaled 401,425. Of these, 252,143 were active members.

HIGHLIGHTS

In fiscal year 2016, total contributions of $1.8 billion were made to Tennessee's state and local pension systems. Of this amount, $363.0 million came from employees.

In fiscal year 2016, Tennessee's state and local pension systems made payments totaling $3.3 billion.

As of fiscal year 2016, Tennessee's state and local pension systems held $53.0 billion in total cash and investment holdings.

See the sections below for specific information on pension systems in Tennessee:

1. General information: This section outlines the different types of pensions systems available in the state, as well as membership information.
2. Contributions: This section details the contributions made to state-level pension systems, and the source of the contributions.
3. Payments: This sections details the payments made by the pensions systems, and details what kinds of payments were made.
4. Cash and investment holdings: This section provides information about the total amount of cash and investments the state's pension systems have, and what kinds of investments they have made.
5. Pension health: This section outlines the findings of two reports regarding pension health, including how much liabilities the state pension systems have and how funded they are.

General information

See also: Pension data, U.S. Census

According to the U.S. Census Bureau, Tennessee had two state pension plans as of 2016:

1. Tennessee State Employees and Teachers Pension Plan
2. Tennessee Political Subdivision Pension Plan

In addition to the aforementioned state-level pension systems, there were 39 locally administered pension systems in Tennessee.

The table below provides general pension system information for Tennessee and surrounding states.

General pension system information, 2016
State	Systems		Total members	Active members		Inactive members
	State	Local		Members	Percent of total	Members	Percent of total
Tennessee	2	39	401,425	252,143	62.81	149,282	37.19
Alabama	7	17	262,612	236,550	90.08	26,061	9.92
Kentucky	6	26	391,735	209,401	53.45	182,334	46.55
Mississippi	4	N/A	297,545	154,767	52.01	142,778	47.99
Source: United States Census Bureau, "State- and Locally-Administered Defined Benefit Pension Systems - All Data by State and Level of Government: 2016"

Contributions

See also: Pension contribution and payment data, U.S. Census

Pension contributions are the funds paid into pension systems. These contributions come from the employer (in the case of public pensions, the government) and employees. Investment earnings are the main source of increases in the fund and are listed separately in the rightmost column in the below table.

In fiscal year 2016, total contributions of $1.8 billion were made to Tennessee's state and local pension systems. Of this amount, $363.0 million came from employees. The remainder came from state and local governments. The table below provides information about pension contributions in Tennessee and surrounding states in fiscal year 2016. All dollar amounts displayed should be multiplied by 1,000 ($240,000 is equal to $240,000,000).

Pension contributions, fiscal year 2016 (dollars in thousands)
State	Total contributions from employees and employers	Employee contributions		Government contributions		Earnings on investments
		Contributions	Percentage of total	Contributions	Percentage of total
Tennessee	$1,779,692	$362,971	20.40%	$1,416,722	79.60%	$1,240,182
Alabama	$2,007,470	$755,222	37.62%	$1,252,248	62.38%	$3,302,753
Kentucky	$2,209,661	$632,865	28.64%	$1,576,796	71.36%	-$167,010
Mississippi	$1,630,035	$574,963	35.27%	$1,055,072	64.73%	$203,223
Source: United States Census Bureau, "State- and Locally-Administered Defined Benefit Pension Systems - All Data by State and Level of Government: 2016"

Payments

See also: Pension contribution and payment data, U.S. Census

Payments are the amounts paid to pension recipients by their pension plans. Pension payments include benefits and withdrawals. Benefits are the regular payments made by a pension plan to the plan's recipients. Pension beneficiaries may also withdraw funds if they leave the system before they receive regular benefits.

In fiscal year 2016, Tennessee's state and local pension systems made payments totaling $3.3 billion. The table below provides pension payment information for Tennessee and surrounding states in fiscal year 2016. The columns labeled "Benefits," "Withdrawals," and "Other" are subsets of total payments. All dollar amounts displayed should be multiplied by 1,000 ($240,000 is equal to $240,000,000).

Pension payments, fiscal year 2016 (dollars in thousands)
State	Total payments	Benefits	Withdrawals	Other
Tennessee	$3,280,554	$3,070,441	$78,079	$132,035
Alabama	$3,678,636	$3,503,063	$124,097	$51,476
Kentucky	$4,077,013	$3,833,078	$61,872	$182,067
Mississippi	$2,655,600	$2,433,506	$113,010	$109,084
Source: United States Census Bureau, "State- and Locally-Administered Defined Benefit Pension Systems - All Data by State and Level of Government: 2016"

Other post-employment benefits

See also: Other post-employment benefits, data

In addition to standard pension payments, some plans may offer pensioners additional benefits. These benefits, sometimes referred to as other post-employment benefits, or OPEBs, consist of health insurance, life insurance, or other benefits that the pensioner may have received while employed. The cost of these benefits can prove complicated for actuaries to calculate because of the changes in fields like medicine, which can results in large changes in spending year to year. This, coupled with the normal challenges in calculating and meeting pension requirements, can result in funding shortages for pension plans.

According to the National Association of State Retirement Administrators, unfunded liabilities totaled nearly $585 billion throughout the country for OPEBs. Tennessee was reported to have about $1.4 billion in unfunded liabilities for OPEBs. This was equal to about 0.4 percent of total state expenditures.

The chart below displays the unfunded liabilities for Tennessee and its surrounding states. All dollar amounts displayed should be multiplied by 1,000,000. For instance, $300 translates to $300,000,000.

Unfunded actuarial accrued liabilities for other post-employment benefits, fiscal year 2015 (dollars in millions)
State	Unfunded liabilities	Percent of state expenditure
Tennessee	$1,441	0.4%
Alabama	$11,638	2.4%
Kentucky	$4,612	1.7%
Mississippi	$732	0.3%
Source: National Association of State Retirement Administrators, "Retiree Health Care Benefits for State Employees in Fiscal Year 2015," accessed August 20, 2017.

Cash and investment holdings

See also: Pension data, U.S. Census

Investments are a crucial part of the pension process. The goal is that, by investing pension contributions, the pensioner will receive more money when he or she retires than he or she and the employer were able to contribute. These investments are made in cash, short-term investments, securities like equities and bonds, or other assets. Cash investments are usually low-risk, short-term investments that have a lower rate of return than other types of investments. Other short-term investments are riskier than cash investments, but have the potential for greater returns. Securities can refer to stocks, bonds, or other types of financial certificates that hold some sort of financial value. As the values of these securities change, they can be traded to make a profit. While there are other applications of securities investments, this represents one of the most common practices.

As of fiscal year 2016, Tennessee's state and local pension systems held $53.0 billion in total cash and investment holdings. The table below summarizes pension system cash and investment holdings for Tennessee and surrounding states. The columns labeled "Total cash and short-term investments," "Total securities," and "Total other investments" are subsets of the grand total. All dollar amounts displayed should be multiplied by 1,000 ($240,000 is equal to $240,000,000).

Total cash and investment holdings, fiscal year 2016 (dollars in thousands)
State	Grand total	Total cash and short-term investments	Total securities	Total other investments
Tennessee	$53,042,292	$2,714,132	$46,313,033	$4,015,127
Alabama	$35,734,586	$1,312,352	$31,061,079	$3,361,155
Kentucky	$28,514,597	$755,688	$24,031,338	$3,727,571
Mississippi	$25,257,079	$1,323,800	$21,480,509	$2,452,770
Source: United States Census Bureau, "State- and Locally-Administered Defined Benefit Pension Systems - All Data by State and Level of Government: 2016"

Pension health

See also: Pension health in Tennessee and Public pension health by state

Pension health is a term used to describe the fiscal condition of a pension system. It can be difficult to gauge pension health in each state; studies use a variety of calculations to determine a pension system's average liabilities, unfunded liabilities, funded ratio, and other metrics. The information on this page comes from two reports by two separate organizations: the Pew Charitable Trusts and the Hoover Institution.

HIGHLIGHTS

According to the Pew Charitable Trusts, the funded ratio for Tennessee's public pension system was 95 percent in fiscal year 2015.

According to the Hoover Institution, Tennessee had unfunded liabilities totaling $45,479,142.

Recent legislation

The following is a list of recent pension policy bills that have been introduced in or passed by the Tennessee state legislature. To learn more about each of these bills, click the bill title. This information is provided by BillTrack50 and LegiScan.

'Note: Due to the nature of the sorting process used to generate this list, some results may not be relevant to the topic. If no bills are displayed below, then no legislation pertaining to this topic has been introduced in the legislature recently.

Recent news

This section links to a Google news search for the term "Tennessee + public + pensions"

Tennessee public pensions news feed

See also

• Public pensions in the United States
• Historical Tennessee pension information
• Tennessee state budget and finances
• Public policy in Tennessee
• Tax policy in Tennessee
• Pension statistics
• Pension health in Tennessee
• Public pensions

External links

• United States Census Bureau, Annual Survey of Public Pensions