SB 542 - HB 805
FISCAL NOTE
Fiscal Review Committee
Tennessee General Assembly
February 14, 2025
Fiscal Analyst: Elizabeth Bransford | Email: elizabeth.bransford@capitol.tn.gov | Phone: 615-741-2564
SB 542 - HB 805
SUMMARY OF BILL: Requires, no later than January 15, 2026, and by January 15 of each
subsequent year, the board of trustees for the Tennessee Consolidated Retirement System (TCRS)
and the governing body of each respective political subdivision pension plan to review their pension
plans’ direct holdings as of December 31 of the prior calendar year to determine which direct
holdings, if any, are restricted investments.
Requires the State Treasurer and each political subdivision governing body to divest from any such
restricted investment and, if they cannot divest expeditiously, requires the TCRS or governing body,
as applicable, to develop a written divestment plan by July 1 of each year and submit a copy of the
divestment plan to the Council on Pensions. Requires such divestment to occur no later than
December 31 of each year, or at a later time established by TCRS or the governing body,
respectively. Authorizes TCRS to delegate such duties to the State Treasurer.
Extends civil liability immunity to the state and its officers and employees, each political subdivision
and its officers and employees, TCRS and its board members, and each political subdivision pension
plan and its governing body for acting in accordance with this act.
FISCAL IMPACT:
NOT SIGNIFICANT
Assumptions:
• The proposed legislation defines “direct holdings” as public securities with identifying
numbers assigned by the Committee on Uniform Securities Identification Procedures or the
International Securities Identification Numbers Organization that are held directly by the
TCRS or a political subdivision pension plan, or in an account or fund in which the TCRS
or political subdivision pension plan owns all shares or interests, excluding securities that
are held in a commingled fund or other collective investment in which the TCRS or a
political subdivision pension plan owns shares or interests, together with other investors
not subject to this act.
• A “restricted investment” refers to investing, reinvesting, or lending funds in a company
that is known through publicly available information to be majority-owned by China.
• TCRS and local governing bodies will be required to identify any direct holdings in
restricted investments and divest from such investments expeditiously.
• In the event an expeditious divestment cannot occur, the applicable body must develop a
divestment plan by July 1 of each year, and implement the divestment by December 31 of
said year, or an established later date.
SB 542 - HB 805 2
• According to TCRS, the state does not currently hold any restricted investments relative to
its defined benefit plan and there will not be an impact to overall liabilities to the retirement
system.
• It is not known whether any political subdivision pension plans hold restricted investments.
However, it is assumed any divested direct holdings that occur as a result of the proposed
legislation will be reinvested and any impact to returns on investments will be minimal.
• Requiring TCRS and local governing bodies to review and divest direct holdings from
restricted investments will not impact liabilities to the retirement system or increase
operational expenditures for state or local government.
• Any fiscal impact is estimated to be not significant.
CERTIFICATION:
The information contained herein is true and correct to the best of my knowledge.
Bojan Savic, Executive Director