Pensions and Retirement Benefits - As introduced, allows a retirement allowance increase equal to the percentage increase in the consumer price index if there is an over-collection of state tax revenue; requires this allowance increase to be used instead of the allowance increase in present law, which cannot exceed 3 percent. - Amends TCA Section 8-36-701.

HB 1296 adjusts retirement benefits for Tennessee pension recipients by linking increases to the Consumer Price Index (CPI) when state tax revenue exceeds budgeted amounts. If CPI rises by at least 0.5% in a fiscal year, beneficiaries receive a cost-of-living adjustment equal to that percentage (rounded up to 1% if between 0.5% and 1%), replacing the current 3% cap. The bill requires the state commissioner to verify tax revenue overcollections by November 1 each year and report to the pension board, which then implements the increase starting July 1. It does not apply to certain public employers unless they formally adopt the cost, and retroactive payments are prohibited.