Future Hamilton County employees won't get the cushy deal in place for current workers if the county follows a move by the state to modernize its retirement benefits.
Now, county employees don't contribute a dime to their retirement, and county taxpayers pay an additional 14.08 percent of each worker's pay to cover their retirement, according to county financial records.
In fiscal 2013, local taxpayers contributed $14.3 million to retirement for working county employees. In the same year, already retired workers received $89 million in benefit payments, according to Tennessee Department of Treasury records.
But starting July 1, big changes are happening to the Tennessee Consolidated Retirement System, and they could trickle down to county governments. New state employees will be offered retirement packages that more closely resemble those found in the private sector.
The traditional defined-benefit pension -- work 30 years and then retire at about 48 percent of salary -- is going the way of the dodo. The private sector moved toward a less-expensive defined contribution plan decades ago.
New state government hires will get a hybrid retirement package that is part traditional pension and part 401(k) defined-contribution plan. The change will be automatic for new teachers and state workers. The new plan will cost taxpayers less, but state employees will have to contribute more toward their retirement.
County governments currently locked into the state system will have the option to bring new employees in under the hybrid plan, and Hamilton County Mayor Jim Coppinger said that's something his staff is investigating.
The numbers would depend on what options the county selects, but under the new plan, taxpayers would match about 9 percent of payroll, split between pension plans and 401(k) plans for each employee. And county employees would be asked to contribute about 7 percent toward their own retirements.
Coppinger said that could save money for taxpayers.
"We are not considering it for existing employees, but we may consider that for new hires in the future," Coppinger said.
Whether that would happen July 1 or years down the road, Coppinger couldn't say.
"We have the option to do that. It may be next year, it may be three years or five years. We are just considering it," he said.
State Treasurer David Lillard said Friday the switch will cost taxpayers less and ensure that when government employees retire, there is money there to pay them. It will also keep all costs steady.
"The new hybrid plan is ... structured so that there are cost controls, and it is intended to keep the employees' contribution and employers' contribution steady over time," he said.
Counties may opt in to the new plan July 1 or at the start of any quarter afterward. Or they can stay in the "legacy system." But once they go to the hybrid, there's no going back, Lillard said.
If Hamilton County makes the change, it will be an aberration in the region, said Gary Hayes, with the University of Tennessee's County Technical Assistance Service. Hayes consults with a dozen counties in Southeast Tennessee.
"I have one county out of my 12 that's opted to go to the [hybrid] 401(k)," Hayes said. "Coffee County is the only county I've got."
Hayes said the move could be good for taxpayers, but it might stunt a county's ability to compete with other governments for employees.
"It's going to be less expensive for the county and the employees are going to get the short end of the stick," he said.
However, he said Hamilton County already is a little different from his other counties because it requires no employee contribution. Other counties in the region put about 8.5 percent of payroll toward retirement funding and require the employees to kick in 5 percent, he said.
Merri Mai Williamson, communications director for SHRM Chattanooga, a society of human resources professionals, said even the hybrid plan outstrips many retirement packages offered in the private sector.
In the nongovernment world, pensions haven't been "traditional" for 30 years.
Private-sector pensions started going away in the 1970s, and were all but nonexistent by the '90s, she said, because the cost of paying for an increasing and aging retired workforce was too great for most companies.
She also said costs for defined contributions, such as 401(k) plans, are more predictable for companies.
"[Our members] moved away from pensions because they were more expensive due to the fact that we, as the company, had to make up any shortfalls to fund the promised amount. With a 401(k), we have a fixed expense," she said.
Contact staff writer Louie Brogdon at lbrogdon @timesfreepress.com or at 423-757-6481.