Cookeville City Council voted to approve multiple resolutions adjusting the retirement plans of future city employees.
City Councilman Mark Miller says the change will have a great impact on the city’s workforce for years to come.
“In my opinion, this is the most critical action we will take in our near future,” Miller says. “The Council will not see the impact of this decision. But by attacking the $19 million of unfunded pension liabilities we currently have, our action will provide a long-term vitality and fiscal lifeline to our city.”
City Financial Director Brenda Imel says the current plan had been in place since the 1970s with adjustments made on a couple occasions.
“It changes the pension plan that we currently have with TCRS for new hires only, from full divine benefit plan to a hybrid plan,” Imes says, “which is a part defined benefit and a defined contribution plan, which includes a 401k.”
The change decreases the city’s contribution from 20 percent to a nine percent cap with a five percent contribution from the employees’ salary. An optional two percent can go towards a 401k if the employee chooses.
Imel says only time will tell as to whether the change will effect the recruiting of future city employees.
“That’s kind of an unknown, but having talked with other people around the state in other cities that have implemented this, they’ve found that it’s not a problem,” Imel says. “It’s still a good benefit plan and a good pension plan.”
Council members voted unanimously to approve the three referendums as part of the changes. The new plan will go into effect beginning July 1, 2019 and only effect employees hired after that date.