RETURN TO SERVICE TEMPORARILY Present law authorizes a retired member or prior class member of the Tennessee consolidated retirement system (TCRS), and a retiree of a local retirement fund receiving benefits, to return to service temporarily in a position covered by TCRS and continue to draw such person's retirement allowance. However, certain conditions must be met. One condition is that the retired member does not return to service until the expiration of at least 60 calendar days from the member's effective date of retirement, unless such member returns to service in a position wherein the member renders no more than one-half the hours the member was scheduled to work prior to retirement and the head of the employing entity certifies to the division of retirement that no other qualified persons are reasonably available to fill the position. This bill removes this condition. This bill adds as a new condition that the retired member must have had a bona fide separation of service. A "bona fide separation of service" means a separation of service where there is (i) no prearranged agreement, whether verbal or in writing, prior to the member's retirement between the member and a participating employer in the retirement system for the member to return to work for the employer after retirement; and (ii) a complete separation of service, from all employment in a position or positions covered by the retirement system, for at least 60 calendar days between the member's effective date of retirement and the first day of work for the employer as a retiree. This bill also requires the head of the employing entity, or the head's designee, to certify to the retirement division that there was no explicit prearrangement at the time of the member's retirement for future employment with the new employing entity after the member's retirement. Present law prohibits the retiree from accruing any additional retirement credit during the retiree's period of reemployment. This bill adds that the retired member, if otherwise eligible, may participate in the state's 401(k) or 457(b) deferred compensation plans, but remains ineligible to accrue additional retirement benefits in the retirement system as a result of the member's reemployment. For a member whose effective date of retirement was in fiscal years 2022-2023, 2023-2024, or 2024-2025, with the state fiscal year being from July 1 to June 30, this bill provides that if the retirement system discovers that the member did not have a bona fide separation of service, then the member must be treated as receiving an in-service distribution and the retirement system must make any required tax reporting changes to reflect the in-service distribution in prior years. After July 1, 2025, the identified members may be temporarily reemployed after a bona fide separation of service. REEMPLOYMENT AFTER RETIREMENT This bill authorizes a retired member or prior class member of the retirement system, and any retired member of a local retirement fund receiving benefits to be reemployed in a position covered by the retirement system without the loss or suspension of the retired member's retirement system benefits, as long as all of the following conditions are met, as certified by the employer:  The retired member must have had a bona fide separation of service.  The retired member is reemployed in a hard-to-fill position. A "hard-to-fill position" is a position where one or more of the following conditions are met: (i) the employer is experiencing difficulty in recruiting and retaining qualified employees for the position; (ii) the position requires specialized certification, credentials, or education; (iii) the demand for the position exceeds the supply; (iv) the position is in high demand in the marketplace; (v) the position is filled by key personnel; (vi) the position requires specific skills and experience; or (vii) the position has other unique recruitment or retention issues identified and documented by the employer.  During the reemployment, the retirement benefit payable to the retired member must be reduced to 70% of the retirement allowance the member would have otherwise been entitled to receive.  The retired member's reemployment must not exceed one year. However, the retired member may be reemployed for additional one-year periods, as long as this bill's conditions are met for each period of reemployment.  To fund the liability created by the bill, the retired member's new employer must pay to the retirement system during each period of reemployment the greater of (i) a payment equal to the amount the employer would have contributed to the retirement system had the retired member been a member of the retirement system during the period of reemployment; or (ii) an amount equal to 5% of the retired member's earnable compensation.  The retired member, if otherwise eligible, may participate in the state's 401(k) or 457(b) deferred compensation plans, but is not eligible to accrue additional retirement benefits in the retirement system as a result of the member's reemployment.  Prior to the commencement of each reemployment of the retired member, the head of the retired member's new employer, or the head's designee notifies the retirement division with authenticated documents or information required by the retirement system and certifies in writing to the retirement division that (i) the position is a hard-to-fill position; (ii) the retired member has the requisite experience and training for the position to be filled; (iv) no other qualified persons are reasonably available to fill the position; and (iv) there was no explicit prearrangement at the time of the member's retirement for future employment with the new employing entity after the member's retirement.  The retiree is not drawing disability retirement benefits.RETIREE EMPLOYED AS A TEACHER Present law authorizes a person retired for at least one year from TCRS, from any superseded system administered by the state, or from any local retirement fund, may accept employment as a K-12 teacher without loss or suspension of retirement benefits as long as certain conditions are met. Those conditions include all of the following:  The retired member holds a teacher's professional license or certificate as may be required.  The retired member is not entitled to tenure status.  The retired member is not eligible to accrue additional retirement benefits, accrue leave or receive medical insurance coverage as a result of such employment.  The retired member must not receive automatic credit for years of experience in determining compensation, so long as the salary paid is not less than the rate of compensation set by the school system for teachers with no experience filling similar positions, nor may such salary exceed 85% of the rate of compensation set by the school system for teachers with comparable training and years of experience filling similar positions. This bill removes these provisions. This removal takes effect January 1, 2026, while the rest of this bill takes effect July 1, 2025. REEMPLOYMENT AS A TEACHER Present law authorizes a retired member of TCRS or of a superseded system, or of a local retirement fund established, may be reemployed in a position covered by the retirement system without the loss or suspension of the retired member's TCRS benefits as long as the following conditions are met:  The retired member is reemployed as a K-12 teacher, as a K-12 substitute teacher, or as a K-12 school bus driver.  The retired member is not reemployed until the expiration of at least 60 calendar days from the member's effective date of retirement.  During the reemployment, the retirement benefit payable to the retired member must be reduced to 70% of the retirement allowance the member would have otherwise been entitled to receive.  To fund the liability, the retired member's new employer must pay to TCRS during each period of reemployment the greater of (i) a payment equal to the amount the employer would have contributed to the retirement system had the retired member been a member of the retirement system during the period of reemployment, or (ii) an amount equal to 5% of the retired member's pay rate.  The retired member is not eligible to accrue additional retirement benefits as a result of the member's reemployment.  Upon the reemployment of the retired member, the retired member's new employer must notify the retirement system of the member's reemployment with documents or information required by the retirement system.  The retiree is not drawing disability retirement benefits. This bill removes these provisions. This removal takes effect January 1, 2026, while the rest of this bill takes effect July 1, 2025.

Statutes affected:
Introduced: 8-36-805, 8-36-809, 8-36-801(c), 8-36-801, 8-25-213(1), 8-25-213