Virginia public pensions
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Membership in the Virginia Retirement System defined benefit plan is automatic and paid by the state.
Virginia has 157,827 total employees as of 2010.[1] In Fiscal Year 2010, the state has a total of 376,778 active and inactive pension fund members, with 148,496 receiving periodic benefit payments. [2]
The Virginia Retirement System administers pension and other employee benefit plans for approximately 600,000 members, retirees and beneficiaries.
The combined unfunded liability of the Virginia Retirement System and other state-supported pension plans amounts to $17.6 billion. [3] Total market value of the VRS as of 9-30-2010 was $50.8 billion. Combined unfunded liability of State-supported plans amounts to $17.6 billion according to the JLARC report.
[edit] Pension Plans
| Plan | Current Value | Percentage funded | Unfunded liabilities | Total state employees | Avg. pension |
|---|---|---|---|---|---|
| Virginia Retirement System | $44 billion | 80.2 percent | $6.6 billion | 330,815 active members | $19,300 |
| State Police Officer's Retirement System | $537 million | 76.6 percent | $80 million | 1,766 active members | $xx |
| Virginia Law Officer's Retirement System | $793 million | 68.2 percent | $117 million | 9,620 active members | $xx |
| Judicial Retirement System | $316 million | 75.6 percent | $47 million | 408 active members | $xx |
[edit] Virginia Retirement System
The Virginia Retirement System is a retirement plan for state employees, teachers, other eligible school division employees, employees of participating political subdivisions and other qualifying employees.
[edit] State Police Officer's Retirement System
The State Police Officer's Retirement System is a retirement plan for state police officers.
[edit] Virginia Law Officer's Retirement System
The Virginia La Officer's Retirement System is a retirement plan for law enforcement officers other than state police officers.
[edit] Judicial Retirement System
The Judicial Retirement System is a retirement plan for judges of state courts of record, state district courts and other qualifying employees.
[edit] Contribution Rates
New state employees are required to contribute 5% of creditable compensation (only local employers would be allowed to pick up this contribution) to the Virginia Retirement System.[4][5]
[edit] Eligibility
Employees become vested with the accumulation of five years of credited service. A vested member is eligible to receive a reduced retirement benefit at age 55 with at least five years of service. Employees can receive a reduced benefit as early as age 50 with at least 10 years of state service. Employees can retire with unreduced benefits at age 50 with at least 30 years of service or age 65 with at least five years of state service. The unreduced monthly retirement benefit is calculated as 1.7% times the years of creditable service, times the employee's average monthly salary during their highest 36 consecutive months of creditable compensation.[6][7]
[edit] Funding Levels
The state's pension liabilities can be calculated in a variety of ways, which yield different numbers. Below are the numbers as calculated by to the Pew Center on the States,[8] the American Enterprise Institute[9] and Professors Robert Novy-Marx of the University of Chicago and Joshua Rauh of Northwestern University, Kellogg Graduate School of Management.[10]
| PEW (2008) | AEI (2008) | Kellogg (2009) |
| $10,723,000 | $53,783,973 | $48,300,000 |
Other information from the Pew Center on the States Feb. 2010 publication "The Trillion Dollar Gap":
| Latest liability | Latest unfunded liability | Annual required contribution | Latest actual contribution |
|---|---|---|---|
| $65,164,000 | $10,723,000 | $1,486,768 | $1,375,894 |
| Latest liability | Latest unfunded liability | Annual required contribution | Latest actual contribution |
|---|---|---|---|
| $3,963,000 | $2,621,000 | $541,163 | $446,321 |
| Number of pension plans | Pension assets ($bn) | Stated liabilities ($bn) | Funding status (% of tax revenue) |
|---|---|---|---|
| 1 | $41.3 | $61.6 | -317% |
This data is based on projected data from 2008 census data.[12] In 2008, $1.94 trillion was set aside for pensions, but it is estimated that states have $5.17 trillion in unfunded liabilities.
[edit] Decreased contributions for schools
In 2010 school districts agreed to lower contributions to teacher pensions from 16.5 percent of each teacher’s salary to 8.93 percent in 2011 and then 10.16 percent in 2012.[13] For Fairfax County, Virginia this means a decrease of $85 million in contributions.[13] Some schools have expressed concerns about how this will impact pensions in the long run.[13]
[edit] Rate of Return
Virginia presumes a 7.50% return rate on its pension investments.[11]
[edit] Collective Bargaining
Virginia state law does not allow collective bargaining for public employees.
[edit] Pension Protests
Union workers, teachers and others rallied in front of the Virginia Capitol in support of union workers protesting changes to collective bargaining rights in Wisconsin. The Virginia action was organized by Moveon.org, a progressive organization.
[edit] Pension Reforms
House Republicans want state employees to contribute to their pensions; Senate Democrats don’t. The House wants to return $120 million to the state pension fund; the Senate wants to send $100 million.
The GOP-led House wants to raise salaries by another 2 percentage points to a total of 5 percent, completely offsetting the 5 percent contribution. Majority Democrats in the Senate are rejecting all employee pension contributions offset by raises. Only state employees hired after July 1, 2010, must contribute to the VRS. Members of the House subcommittee on retirement said the discrepancy should be corrected by extending that requirement to all employees — as long as they’re given corresponding raises. [14]
On February 2, the Virginia Senate Senate Finance Committee killed four bills that would have mandated or created a defined contribution plan for state and local employees in Virginia.
[edit] Pension Litigation
A lawsuit filed by Virginia against the Bank of New York was dismissed by a Fairfax County judge, who ruled the state could not proceed under the Virginia Fraud Against Taxpayers Act, which requires the submission of a claim for payment that didn’t occur in this case. The lawsuit, Commonwealth of Virginia v. The Bank of New York Mellon Corporation claimed that the bank defrauded state pension funds through foreign-currency transactions. Virginia asked the court for $120 million plus interest in damages, based on $40 million of actual damages and treble damages. [15]
[edit] References
- ↑ 2010 Annual Survey of Public Employment and Payroll, Census 2010
- ↑ 2010 Annual Survey of Public Employment and Payroll--Membership by State, Census 2010
- ↑ Newsadvance, Virginia Retirement System Underfunded, JLARC Says, Dec. 14, 2010
- ↑ National Conference of State Legislators "Pensions and Retirement Plan Enactments in 2010 State Legislatures" July 19, 2010
- ↑ Virginia House Bill 1189 2010 session
- ↑ Cite error: Invalid
<ref>tag; no text was provided for refs namedben - ↑ VRS Defined Benefit
- ↑ "State Pensions and Retiree Healthcare Benefits: The Trillion Dollar Gap,” Pew Center on the States, accessed January 4, 2011
- ↑ Biggs, Andrew, “The Market Value of Public-Sector Pension Deficits,” AEI Outlook Series, no. 1 (2010)
- ↑ Novy-Marx, Robert and Joshua Rauh, 2010, "Public Pension Promises: How Big Are They and What Are They Worth," Journal of Finance (forthcoming)
- ↑ 11.0 11.1 11.2 Pew Center on the States "The Trillion Dollar Gap" Feb. 2010
- ↑ Northwestern University, The Liabilities and Risks of State-Sponsored Pension Plans, May 2010
- ↑ 13.0 13.1 13.2 Watchdog, Virginia pension deferments coming back to bite schools, Sept. 7, 2010
- ↑ Statehouse News, House, Senate Offer Contrasting Plans, Feb. 10, 2011
- ↑ Washington Post, BNY Mellon Wins Dismissal of Virginia Currency-Trading Suit, May 1, 2012
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