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PUBLIC CHAPTER NO. 159
SENATE BILL NO. 251
By Yager, Reeves
Substituted for: House Bill No. 313
By Marsh, Hawk
AN ACT to amend Tennessee Code Annotated, Section 8-25-213 and Title 8, Chapter 36, Part 8,
relative to reemployment after retirement.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:
SECTION 1. Tennessee Code Annotated, Section 8-36-805, is amended by deleting the
section and substituting:
(a) A retired member or prior class member of the retirement system, and a retiree of
a local retirement fund receiving benefits in accordance with chapter 35, part 3 of this title
may return to service temporarily in a position covered by the retirement system and
continue to draw the person's retirement allowance; provided, that all of the following
conditions are met:
(1) The retired member must have had a bona fide separation of service. For
purposes of this section, a "bona fide separation of service" means a separation of
service where there is:
(A) No prearranged agreement, whether verbal or in writing, prior to
the member's retirement between the member and a participating employer in
the retirement system for the member to return to work for the employer after
retirement; and
(B) A complete separation of service, from all employment in a position
or positions covered by the retirement system, for at least sixty (60) calendar
days between the member's effective date of retirement and the first day of
work for the employer as a retiree;
(2) During a twelve-month period, the retiree must not work more than one
hundred twenty (120) days or the equivalent of one hundred twenty (120) days, or if
employed as a teacher by an institution of higher learning, twenty-four (24) quarter
credit hours or eighteen (18) semester credit hours;
(3) The entire compensation payable to the retired member for the temporary
employment period must not exceed an amount equal to the sum of sixty percent
(60%) of the annual full-time salary received by the retired member in the year
immediately prior to the member's last paid day of covered employment, adjusted by
five percent (5%) for each year since the member's last paid day of covered
employment or by such other percentage as may be determined by the treasurer and
the commissioner of human resources. In determining the percentage for a given
year, the treasurer and the commissioner of human resources may consider any
matter which, in their discretion, they deem relevant, including, but not limited to, the
condition of the labor market and the ability to fill the respective positions;
(4) The retired member may work beyond the one hundred twenty (120) days
prescribed in subdivision (a)(2) if employed as a substitute teacher in a public school
system; provided, that the compensation payable to the retired member for such work
does not exceed the rate of compensation set by the public school system for
substitute teachers filling similar vacant positions, and the total salary paid to any
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such retired member for teaching during the twelve-month period does not exceed
the pertinent pro rata share of average salary being paid at the institution in the
academic discipline concerned;
(5) The head of the employing entity or the head's designee:
(A) Certifies to the retirement division the member's name, period to be
employed, number of days to be worked, compensation to be paid, anticipated
termination date, and that there was no explicit prearrangement at the time of
the member's retirement for future employment with the new employing entity
after the member's retirement. The certification must be made in the manner
prescribed by the retirement division and must be filed annually, if applicable,
and acknowledged by the member;
(8) Submits a statement showing working hours and compensation for
the retiree when requested; and
(C) Is subject to audit to verify working hours and the compensation
being paid;
(6) If the period of return to service or the compensation therefor exceed that
specified in this section, then the person's monthly retirement allowance must be
reduced by the greater of the following:
(A) Each day worked in excess of the limitation must result in the loss
of one-twentieth (1/20) of the monthly retirement allowance; or
(8) Any compensation received in excess of the limitation must reduce
the retirement allowance payable by the ratio the compensation exceeds the
limitation;
(7) The retirement system may obtain reimbursement for any retirement
benefits overpaid as a result of a retiree's reemployment in excess of that permitted
by this section, by deductions from a retiree's monthly benefit;
(8) The retired member, if otherwise eligible, may participate in the state's
401 (k) or 457(b) deferred compensation plans, but is not eligible to accrue additional
retirement benefits in the retirement system as a result of the member's
reemployment; and
(9) The retiree is not drawing disability retirement benefits under this chapter.
(b) For a member whose effective date of retirement was in fiscal years 2022-2023,
2023-2024, or 2024-2025, with the state fiscal year being from July 1 to June 30, if the
retirement system discovers that the member did not have a bona fide separation of service,
then the member must be treated as receiving an in-service distribution and the retirement
system shall make any required tax reporting changes to reflect the in-service distribution in
prior years. After July 1, 2025, the identified members may be temporarily reemployed
pursuant to this chapter after a bona fide separation of service.
SECTION 2. Tennessee Code Annotated, Section 8-36-809, is amended by deleting the
section and substituting:
Notwithstanding another law to the contrary, a retired member or prior class member
of the retirement system, and any retired member of a local retirement fund receiving
benefits pursuant to chapter 35, part 3 of this title may be reemployed in a position covered
by the retirement system without the loss or suspension of the retired member's retirement
system benefits; provided, that the following conditions are met, as certified by the employer:
(1) The retired member must have had a "bona fide separation of service". For
purposes of this section, a "bona fide separation of service" means a separation of
service where there is:
(A) No prearranged agreement, whether verbal or in writing, prior to
the member's retirement between the member and a participating employer in
the retirement system for the member to return to work for the employer after
retirement; and
(8) A complete separation of service from all employment in a position
or positions covered by the retirement system of at least sixty (60) calendar
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days between the member's effective date of retirement and the first day of
work for the employer as a retiree;
(2) The retired member is reemployed in a hard-to-fill position. For purposes of
this section, a "hard-to-fill position" means a position where one (1) or more of the
following conditions are met:
(A) The employer is experiencing difficulty in recruiting and retaining
qualified employees for the position;
(B) The position requires specialized certification, credentials, or
education;
(C) The demand for the position exceeds the supply;
(D) The position is in high demand in the marketplace;
(E) The position is filled by key personnel;
(F) The position requires specific skills and experience; or
(G) The position has other unique recruitment or retention issues
identified and documented by the employer;
(3) During the reemployment, the retirement benefit payable to the retired
member must be reduced to seventy percent (70%) of the retirement allowance the
member would have otherwise been entitled to receive;
(4) The retired member's reemployment must not exceed one (1) year;
however, the retired member may be reemployed for additional one-year periods,
provided, that the conditions contained in this section are met for each period of
reemployment;
(5) To fund the liability created by this section, the retired member's new
employer shall pay to the retirement system during each period of reemployment the
greater of:
(A) A payment equal to the amount the employer would have
contributed to the retirement system had the retired member been a member
of the retirement system during the period of reemployment; or
(B) An amount equal to five percent (5%) of the retired member's
earnable compensation;
(6) The retired member, if otherwise eligible, may participate in the state's
401 (k) or 457(b) deferred compensation plans, but is not eligible to accrue additional
retirement benefits in the retirement system as a result of the member's
reemployment;
(7) Prior to the commencement of each reemployment of the retired member,
the head of the retired member's new employer, or the head's designee:
(A) Notifies the retirement division of the retired member's
reemployment with documents or information required by the retirement
system; and
(B) Certifies in writing to the retirement division that:
(i) The position is a hard-to-fill position;
(ii) The retired member has the requisite experience and
training for the position to be filled;
(iii) No other qualified persons are reasonably available to fill
the position; and
(iv) There was no explicit prearrangement at the time of the
member's retirement for future employment with the new employing
entity after the member's retirement; and
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(C) Makes the certification in the manner prescribed by the retirement
division, file the certification annually, if applicable, and ensure the certification
is acknowledged by the member; and
(8) The retiree is not drawing disability retirement benefits under this chapter.
SECTION 3. Tennessee Code Annotated, Section 8-36-801 (c), is amended by deleting the
second sentence and substituting:
This subsection (c) does not apply to retirees who return to service in a position covered by
the retirement system as provided in§ 8-36-805, § 8-36-809, § 8-36-810, § 8-36-818, or§ 8-
36-820.
SECTION 4. Tennessee Code Annotated, Section 8-25-213(1 ), is amended by deleting the
subdivision and substituting:
(1) Is subject to the applicable work and compensation limits set forth in § 8-36-
805(a).
SECTION 5. Tennessee Code Annotated, Sections 8-36-821 and 8-36-822, are amended by
deleting the sections in their entireties.
SECTION 6. Section 5 takes effect January 1, 2026, the public welfare requiring it. All
remaining sections of this act take effect July 1, 2025, the public welfare requiring it.
4
SENATE BILL NO. 251
PASSED: March 31, 2025
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SPEAKER OF THE SENATE
~
CAMERON SEXTON, SPEAKER
HOUSE OF REPRESENTATIVES
Apa 11 ~ APPROVED this I
day of 2025
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