Tennessee Senate Bill SB0251

Tennessee 2025-2026 Regular Session

• Introduced: 1/22/25
• Engrossed: 3/10/25
• Enrolled: 4/1/25
• Passed: 4/11/25
• Chaptered: 5/2/25

Caption

AN ACT to amend Tennessee Code Annotated, Section 8-25-213 and Title 8, Chapter 36, Part 8, relative to reemployment after retirement.

Summary

SB 251 revises Tennessee’s rules for retirees who return to work in positions covered by the state retirement system or certain local retirement funds. The bill creates two main pathways for post-retirement reemployment. First, it allows retirees to take temporary covered employment while continuing to receive retirement benefits, so long as they have a bona fide separation from service, observe a 60-day break before returning, stay within annual day and compensation limits, and meet employer certification and reporting requirements. The bill also sets special rules for substitute teachers and for retirees who work in higher education teaching roles. Second, the bill authorizes reemployment of retirees in “hard-to-fill” positions without suspension of benefits, but only if the retiree had a bona fide separation, the job meets one or more hard-to-fill criteria, and the retiree’s benefit is reduced to 70% during the reemployment period. The new employer must also make payments to the retirement system to help fund the liability created by the rehire. The bill further clarifies that retirees in these programs may participate in the state’s 401(k) or 457(b) deferred compensation plans, but cannot earn additional retirement service credit, and it excludes disability retirees from these reemployment provisions.

Impact

The bill amends Tennessee Code Annotated provisions governing the Tennessee Consolidated Retirement System and related local retirement fund reemployment rules, replacing existing sections and deleting others. It changes the legal standards for when retirees may return to covered employment, adds a formal definition of bona fide separation of service, imposes reporting and audit obligations on employers, and establishes benefit-reduction and employer-contribution requirements for hard-to-fill reemployment. It also updates a separate code section to align work and compensation limits with the new temporary reemployment rules and repeals Sections 8-36-821 and 8-36-822 effective January 1, 2026.

Sentiment

The bill appears to have been broadly supported. It passed the Senate State & Local Government Committee unanimously 9-0 and then passed the floor motion to adopt 30-0, indicating little visible opposition in the recorded votes. The overall tone of the measure suggests a practical effort to address workforce shortages while preserving retirement-system safeguards.

Contention

No committee transcript was provided, so specific debate points are not available. Based on the text, the main policy tension is between allowing retired public employees to fill staffing gaps and preventing abuse of retirement benefits through prearranged retirements or excessive post-retirement work. The bill addresses that concern by requiring a bona fide separation, limiting days and compensation, mandating employer certifications, and reducing benefits for hard-to-fill reemployment. Potentially affected parties include retirees, school systems, higher education institutions, state agencies, local retirement funds, and the retirement system administrators who must enforce the new rules.