Tennessee Senate Bill SB0542

Tennessee 2025-2026 Regular Session

• Introduced: 1/30/25
• Chaptered: 4/28/25
• Passed: 4/28/25

Caption

AN ACT to amend Tennessee Code Annotated, Title 9, Chapter 4, Part 15, relative to investments.

Summary

SB0542, enacted as Public Chapter No. 289, adds a new part to Tennessee law governing investments by the Tennessee Consolidated Retirement System and by political subdivision pension plans. The bill requires the board of trustees for the state retirement system, and the governing bodies of local defined benefit pension plans, to review direct holdings annually to identify any “restricted investments,” defined as investments in companies known through public information to be majority-owned by China, including the Chinese Communist Party, Chinese military, or related instrumentalities. If a restricted investment is identified, the state treasurer must divest from it for the state retirement system, and local pension governing bodies must divest according to their investment policies. If immediate divestment is not possible, the bill requires a written divestment plan, submitted to the chair of the council on pensions, with implementation consistent with fiduciary duties, the prudent investor rule, and related state standards. The bill also allows the board to delegate its responsibilities to the state treasurer and provides immunity from civil liability for the state, political subdivisions, retirement system officials, and pension plan governing bodies acting under the section.

Impact

The bill amends Tennessee Code Annotated Title 9, Chapter 4, Part 15 by creating a new statutory framework for screening and divesting pension investments tied to China-majority-owned companies. It directly affects the investment authority and duties of the Tennessee Consolidated Retirement System, the state treasurer, and any political subdivision defined benefit pension plans subject to the statute. It also adds reporting and divestment deadlines and expressly preserves fiduciary standards while shielding covered public entities and officials from civil liability for actions taken under the law.

Sentiment

The available voting history suggests the bill was generally supported, with the Senate State & Local Government Committee recommending passage by an 8-1 vote. The bill ultimately passed and was enacted, indicating broad legislative approval. No committee transcript is provided, so the record here shows support in the vote history but does not include detailed floor or committee debate.

Contention

The main point of contention appears to be the policy of requiring public pension systems to identify and divest from investments in companies majority-owned by China. Supporters likely viewed the measure as a national-security or foreign-policy-related safeguard for public funds, while the single dissenting vote suggests at least some concern about the impact on investment management, fiduciary discretion, or the practical difficulty of divestment. The bill itself addresses those concerns by allowing delayed divestment plans, requiring consistency with the prudent investor rule, and permitting delegation to the state treasurer.