Retaining Effective Teachers Policy
The state should ensure that excessive resources are not committed to funding teachers' pension systems.
As of June 30, 2010, the most recent date for which an actuarial valuation is available, Tennessee's teacher pension system is 90.6 percent funded and has a 20-year amortization period. This means that if the plan earns its assumed rate of return and maintains current contribution rates, it would take the state 20 years to pay off its unfunded liabilities. Both levels are better than regulatory recommendations, and Tennessee's system is financially sustainable, according to actuarial benchmarks.
Tennessee does not commit excessive resources toward its teachers' retirement system. The mandatory employee contribution rate to the defined benefit plan is 5 percent, and the mandatory employer contribution rate is 6.42 percent. Both of these rates are reasonable, considering that teachers and local districts are also contributing to Social Security.
Tennessee Consolidated Retirement System, Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2010 http://www.treasury.state.tn.us/TCRSReport2010.pdf
Tennessee noted that further information on this issue can be reviewed in TN law (49-5-901 through 916).