Kingsport returns to Tennessee Consolidated Retirement System
In an effort to provide employees with a more competitive retirement plan, the City of Kingsport is returning to the Tennessee Consolidated Retirement System effective January 1, 2023.
The Board of Mayor and Aldermen approved three measures during its regular meeting Tuesday night related to this move:
- To enter the TCRS Hybrid Plan with cost controls.
- To implement the bridge benefit for public safety employees.
- To adopt an agreement for a 401(k) and 457 plan.
The TCRS Hybrid Plan includes two main components – a defined benefit (pension) and a defined contribution (401k). The maximum city liability for the plan is 9%.
The public safety bridge is a benefit for fire and police positions under TCRS that will cover the financial gap between early retirement (age 55) and age 62.
Only employees hired after July 1, 2012 will be affected by this switch – approximately 400 city employees and 400 classified school employees. Going back to TCRS will have an increased annual cost to the city – approximately $300,000 for the hybrid plan and $60,000 for the public safety bridge.
However, moving back to TCRS will place all employees in the same retirement system as other state employees, while providing a cohesive one-stop shop package with better financial planning and retirement education.
“In a service based industry, retention and attraction of our employees is essential if we are going to continue to provide the services our customers expect,” said City Manager Chris McCartt. “The perpetual churn being experienced in the workforce has required every employer, including government, to re-evaluate all aspects of the total employment package.
“Kingsport’s return to TCRS further illustrates a century-long commitment of investing in our employees and their families.”
Kingsport withdrew from TCRS in 2012 due to rate volatility and a lack of cost controls within the system. In return, Kingsport went with a 401(a) plan with a maximum contribution of 16% – 5% mandatory from employers and employee and the city would match up to an additional 3%.
“We recognized that saving for retirement is not easy, especially as a new employee early in their career,” said Tyra Copas, human resources director for the city. “We believe the TCRS Hybrid plan with the defined benefit and defined contribution will help our employees build their retirement even if they only contribute their mandatory 5%.”
In addition to addressing this concern, the return to TCRS aligns with the city’s strategic plan to be more attractive and competitive as an employer.
“Cities across the country are struggling to retain and attract quality employees,” Copas said. “We’re in this new workforce dynamic with all employers competing for a shrinking pool of candidates. This move will definitely help us be more competitive.”