NASHVILLE, Tenn. – Legislation recently introduced in the Tennessee General Assembly aims to bridge the retirement gap for hundreds of thousands of workers who currently lack access to savings plans through their employers. House Bill 1447, sponsored by State Rep. Charlie Baum (R-Murfreesboro), would create the Tennessee Retirement Savings Plan Act, a state-administered program designed for private-sector employees.
A New Safety Net for Workers - The bill proposes the creation of a defined contribution retirement plan for Tennessee residents employed for compensation within the state. Under the act, a newly formed Tennessee Retirement Savings Board would oversee the development and implementation of the plan. This board would consist of seven members, including the State Treasurer and various governor-appointed representatives from the investment and business communities.
Employer Requirements and Automatic Enrollment - A key feature of the legislation is the requirement for employers with more than five employees to offer their staff the opportunity to contribute to the state plan via payroll deductions. This mandate only applies to businesses that do not already provide a qualified retirement option, such as a 401(k) or 403(b).
To encourage participation, the plan utilizes automatic enrollment with a default contribution rate set at 5% of an employee’s wages. However, the bill preserves individual choice, allowing employees to opt out of the plan at any time or adjust their contribution levels.
Professional Management and Portability - The act emphasizes professional management and low administrative fees to protect participants' savings. Furthermore, the accounts are designed to be portable, meaning workers can maintain their accounts even if they change employers or roll the funds into other retirement vehicles.
Importantly, the legislation clarifies that the State of Tennessee and employers bear no liability for investment losses, and neither has a proprietary interest in the contributions or earnings within the accounts.
Phased Rollout Timeline - If passed, the board would be required to establish the plan so that contributions can begin no later than January 1, 2029. The eligibility rollout would follow a phased schedule based on company size:
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January 1, 2029: Employers with more than 100 employees.
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January 1, 2030: Employers with 25 to 100 employees.
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January 1, 2031: Employers with 5 to 24 employees.
Before implementation, the board must conduct a thorough market analysis and ensure the plan does not conflict with the federal Employee Retirement Income Security Act (ERISA).
Summerizing House Bill 1447: House Bill 1447, known as the Tennessee Retirement Savings Plan Act, establishes a state-administered defined contribution retirement plan for private-sector employees who currently lack access to employer-sponsored plans. The act creates a seven-member Tennessee Retirement Savings Board to oversee the program, conduct market and legal feasibility analyses, and manage the plan's professional investment strategies. Once implemented, employers with five or more workers who do not offer a qualified retirement plan must automatically enroll their staff, though employees retain the right to opt out or adjust their contribution levels. The program features a default 5% payroll deduction, account portability between jobs, and a phased rollout schedule based on employer size, beginning with large companies in 2029 and extending to smaller businesses by 2031. Importantly, the bill specifies that the state and employers are not liable for investment losses and provides that the plan will not be established if it is found to be subject to the federal Employee Retirement Income Security Act (ERISA).
Rep. Charlie Baum represents District 37, covering portions of Rutherford County.
