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Board considers expanding retirement match eligibility and increasing city 401(a) match cap for newer hires
Summary
City staff and the pension committee recommended amending the voluntary defined-contribution matching program for employees hired on or after Jan. 1, 2017 by removing a two-year waiting period and increasing the match cap from 2% to 3%; staff said implementation would be January 2026 and projected future budget impacts.
The Board of Mayor and Aldermen heard staff and employee pension committee recommendations on Resolution 2025-73 to amend the city’s voluntary defined-contribution matching program for employees who are members of the state pension system.
Christine (staff), presenting the proposal, said the change would: (1) remove the two-year waiting requirement for eligibility and (2) increase the maximum matched employee contribution from 2% of salary to 3%. Under the current program an employee contributes up to 2% to a 401(a) and the city matches; the proposed change expands eligibility and raises the matching ceiling.
Staff said the program is voluntary and modeled after a neighboring municipality’s approach. Participation among eligible employees is about 35%. Christine told the board that in fiscal year 2025 the city’s match expense was just over $132,000 and that, if participation rose to 50 percent with the higher match, an additional annual cost could be on the order of $237,000 in a future year; staff said such expense would be subject to future budget appropriation.
The pension committee unanimously recommended the change. Staff said the changes would be implemented Jan. 2026 if adopted.
Ending: The board heard comments in support of the Tennessee Consolidated Retirement System and the proposed expansion. Staff will return the resolution for formal adoption as placed on the evening agenda.
