West Virginia public pensions
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West Virginia public pensions include the pension system the West Virginia Consolidated Public Retirement System. West Virginia faces a long-term funding shortfall in its retiree health care system that actuaries have placed at $7.4 billion, one of the biggest in the nation on a per-capita basis.[1]
West Virginia has 47,613 total public employees as of 2010.[2] In Fiscal Year 2010, the state has a total of 91,887 active and inactive pension fund members, with 51,733 receiving periodic benefit payments. [3]
A recent study by economists Joshua Rauh of the Kellogg School of Management at Northwestern University and Robert Novy-Marx of the University of Chicago Booth School of Business concluded that the West Virginia pension fund will run out of money in 2019.[4]
According to the United States Census Bureau, the state has 40 locally-administered pension systems.[5]
Public Pensions
| Plan | Value | Unfunded liabilities | Percentage funded | Active members | Avg. Salary |
|---|---|---|---|---|---|
| Teachers Retirement System [6] | $5.07 billion | $4.7 billion | 46.5 percent | 67,786 active members | $xx |
| Public Employees Retirement System[6] | $4.54 billion | $1.3 billion | 74.6 percent | 72,339 active members | $xx |
| Deputy Sheriff Retirement System[6] | $113 million | $46 mllion | 66.4 percent | 1,354 active members | $xx |
| Emergency Medical Services Retirement System[6] | $32 million | $7.8 billion | 75.1 percent | 583 active members | $xx |
| Public Safety Death, Disability, and Retirement Fund[6] | $482 million | $186 million | 68.5 percent | 839 active members | $xx |
| State Police Retirement System[6] | $70 million | $16 million | 76.2 percent | 587 active members | $xx |
| Judges Retirement System[6] | $124 million | N/A | 107 percent | 132 active members | $xx |
Teachers Retirement System
The Teachers’ Retirement System was established on July 1, 1941 to provide retirement benefits for teachers and school service personnel. TRS is a defined benefit plan that currently has approximately 35,701 active members and 29,245 retired members. An active member contributes 6 percent of his or her gross monthly salary into the retirement plan. If you were a member prior to July 1, 1991, the employer contributes an additional 15 percent of the member’s gross monthly salary into the plan. For member’s hired for the first time on or after July 1, 2005 or for member’s who transferred from the Teachers’ Defined Contribution System, the employer contributes an additional 7.5 percent of the member’s gross monthly salary into the plan.
Public Safety Death, Disability and Retirement System
PSDDRS is a single employer defined benefit public employee retirement system covering all West Virginia State Police (State Police) hired on or before March 11, 1994. This plan is closed to new entrants. A member is eligible for normal retirement at age 50 after 20 years of contributory service, or at any age upon completion of 25 years of service. There is no vesting in the State’s contributions prior to ten years of service. Benefits payable to members retiring prior to age 50 are deferred until the normal retirement date. The annual retirement benefit is 5.5% of the members’ aggregate salary, but not less than $6,000 per year.
State Police Retirement System
SPRS is a single employer defined benefit public employee retirement system that was established for all State Police hired on or after March 12, 1994. SPRS provides retirement, death, and disability benefits. A member is eligible for normal retirement at age 50 with 25 years of service or age 52 with 20 years of credited service. A member is eligible for a reduced benefit with 20 years of credited service and retiring before age 52. The annual regular retirement benefit, paid monthly, is equal to 2.75 percent of the final average salary multiplied by the years of service. Final average salary is the average of the five highest calendar years of earnings during the last ten years of earnings.
Deputy Sheriff Retirement System
DSRS, a multiple employer defined benefit cost sharing public employee retirement system, was established for all deputy sheriffs hired by all 55 county governments on July 1, 1998. The annual regular retirement benefit is equal to 2.25 percent of a member’s final average salary multiplied by the member’s years of credited service. Final average salary refers to the average of the highest annual compensation received for covered employment by the member during any five consecutive plan years within the member’s last ten years of service.
Judges Retirement System
JRS is a single employer defined benefit public employee retirement system covering State judges and justices who elect to participate. JRS provides retirement as well as death and disability benefits. A member who was appointed or elected to the bench prior to July 2, 2005 is eligible for normal retirement upon the attainment of 24 years of service of which at least 12 years is as a sitting judge or justice, 16 years of service at age 65 of which at least 12 years is as a sitting judge or justice, or 8 full years of service after age 65.
The annual benefit paid to judges and justices on the bench prior to July 2, 2005 is 75 percent of the current annual salary of the office from which the participant retires, with surviving spouse and dependent child benefits. This benefit is proportionally increased upon increase in salary for active sitting judges and justices.
Emergency Medical Services Retirement System
The EMSRS Act was passed by the Legislature in March 2007. Final Average Salary is the average of the highest annual compensation received by the member during covered employment for any 5 consecutive plan years within the last 10 years of service.
Municipal Police Officers and Firefighters Retirement System
The MPFRS Act was passed in November 2009. The MPFRS had two participating employers as of June 30, 2010. If there are fewer than 100 members on January 1, 2014, all members will be merged into the Emergency Medical Services Retirement System.
Eligibility
Active employees with five or more years of contributing service , are eligible for full retirement benefits at age 60, OR whether employed or not when the employee's age plus years of contributing service are equal to or greater than 80, with a minimum age of 55.[7]
Contribution Rates
Each employee contributes 4.5% of salary to the retirement system (tax-deferred).[7]
Retiree Health Care
In West Virginia, the 36,000 state employee or public school teacher retirees receive a monthly subsidy paid primarily by the state intended to help cover the costs of their health insurance premiums. The average monthly subsidy is $333 per retiree. The state will not offer the benefit to employees hired after July 1, 2010.[1] However, the American Federation of Teachers of West Virginia and the West Virginia Education Association have filed lawsuits opposing the reform.[8]
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) |
| $4,968,709 | $14,378,914 | $11,100,000 |
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 |
|---|---|---|---|
| $13,642,584 | $4,968,709 | $481,703 | $510,258 |
| Latest liability | Latest unfunded liability | Annual required contribution | Latest actual contribution |
|---|---|---|---|
| $6,362,640 | $6,108,398 | $174,842 | $143,582 |
| Number of pension plans | Pension assets ($bn) | Stated liabilities ($bn) | Funding status (% of tax revenue) |
|---|---|---|---|
| 2 | $6.6 | $12.3 | -270% |
This data is based on projected data from 2008 census data.[11] In 2008, $1.94 trillion was set aside for pensions, but it is estimated that states have $5.17 trillion in unfunded liabilities.
Rate of Return
West Virginia presumes a 7.50% return rate on its pension investments.[8]
In FY2010, West Virginia's pension funds saw a return of 16 percent. In FY2011, the state's invested assets produced a 20.7 percent. In FY2009 and the year prior, however, saw the funds suffer significant losses.[12]
Local public pensions
- Main article: Local government public pensions
According to the United States Census Bureau, the state has 40 locally-administered pension systems.[5]
Transparency
- Main articles: Public pension disclosure and Governmental Accounting Standards Board
Data availability
Data included annual financial audits and summary data of each plan performance is posted.[13]
Pension recipients and the amounts paid to each recipient are not posted.
Fund performance data
Information on fund investments is not posted on the CPRB website, but is included in annual financial reports.[13]
Rate of return
The assumed rate of return is not posted on the CPRB website, but is included in the annual financial reports.[13]
Unfunded liabilities
Unfunded liabilities are not posted on the website, but are included in the annual financial reports and the annual data summary sheet.[13]
Oversight
West Virgina addresses pay-to-play abuse by limiting campaign contributions during the negotiation and performance of the contract. [14]
The Consolidated Public Retirement Board provides oversight for the state pension plans. Audits are performed by a contracted CPA firm.
See also
External links
- West Virginia Consolidated Public Retirement System
- West Virginia State Pension Fund Management - State Integrity Investigation
References
- ↑ 1.0 1.1 Stateline.org "In graying West Virginia, a mountain of retiree health bills" July 13, 2010
- ↑ 2010 Annual Survey of Public Employment and Payroll, Census 2010
- ↑ 2010 Annual Survey of Public Employment and Payroll--Membership by State, Census 2010
- ↑ New Mexico, Study: NM state pension plan will run out of money in 13 years, Sept. 9, 2010
- ↑ 5.0 5.1 "Public Employee Retirement Systems State- and Locally-Administered Pensions Summary Report: 2010", United States Census Bureau, April 30, 2012
- ↑ 6.0 6.1 6.2 6.3 6.4 6.5 6.6 2011 CAFR
- ↑ 7.0 7.1 Benefits
- ↑ 8.0 8.1 8.2 8.3 8.4 "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)
- ↑ Northwestern University, The Liabilities and Risks of State-Sponsored Pension Plans, May 2010
- ↑ MSNBC.com "W.Va.'s 1-year return on Wall St nearly 21 percent " Sept. 7, 2011
- ↑ 13.0 13.1 13.2 13.3 CPRB Publications
- ↑ WV Pay to Play Law
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