The TRS 4 benefit plan’s central feature is a stabilization reserve fund that helps provide retirement security for members and maintain a fully funded plan. The concept of this fund, which can be used should there be any future funding needs, is receiving national recognition as an innovative approach.
The National Institute on Retirement Security (NIRS), which was co-founded by defined benefit provider groups, recently presented an award for a model public pension funding policy authored by the Pew Charitable Trust. The model plan combines features of policies in Tennessee, California and Oregon, including Tennessee’s reserve fund. The TRS 4 plan for new members that was created by House Bill 258 (21 RS), with input from many education groups and others, uses concepts from the Tennessee plan – primarily the reserve fund and risk controls – some of which are cited in the award.
Other innovations of TRS 4 include fixed statutory contribution rates for members and employers and monthly incentives to reward longer careers. This plan is designed as another way to ensure Kentucky teachers’ retirement plans provide a secure, lifetime benefit that replaces Social Security.
(Posted April 2022)