News Talk 94.1/AM 1600 Where The Upper Cumberland Talks
Cookeville Council members will consider three resolutions Thursday that would update the city’s retirement plan for future employees.
City Manager Mike Davidson says if approved this month, the policy changes would go into effect July 1 of next year.
“Employees going forward, the new employees as of July 1 2019, will be required to contribute five percent of their salary toward the defined benefit plan,” Davidson says, “and they’re automatically enrolled in the 401k plan. They’re automatically enrolled to contribute two percent into that.”
Davidson notes the new plan would only effect city employees hired after the July 1 date. Those employees will then have the option to opt out of the two percent contribution if they choose to do so.
Davidson says it’s unclear as to whether the proposed changes will impact future recruitment of newer employees.
“If we see or think this is having a negative impact, we still have that option that, with the defined contribution piece of it, the city can match whatever the city puts in there,” Davidson says. “We have that ability to match that. We can look at that as someway to address [recruiting].”
The current “legacy plan” was established by the City of Cookeville in the 1970s with a modification made in the 1990s to allow the city to cover 100 percent of retirement contributions. The change included a 20 percent rate on top of payroll.
The new “hybrid plan” lowers the city’s contribution to nine percent with room for the city to add an additional two percent contribution if needed. The new plan would also change the calculation of when an employee could retire.
Council members will vote on the proposed changes during Thursday evening’s meeting beginning at 5:30 p.m. The changes were introduced during Monday afternoon’s work session.
