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2012 SESSION

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HB 1129 Virginia Retirement System; modifies several provisions of defined benefit retirement plan.

Introduced by: William J. Howell | all patrons    ...    notes | add to my profiles | history

SUMMARY AS PASSED HOUSE:

Virginia Retirement System; defined benefit plan.  Modifies several provisions of the defined benefit retirement plan. Beginning January 1, 2013, the bill changes the calculation of average final compensation to cover a period of 60 months rather than 36 months. Under current law, the use of a 60-month period applies only to those employees hired on or after July 1, 2010. However, current employees affected by this change in average final compensation may use the 36-month period of calculation for compensation received prior to January 1, 2013, if it is greater than the 60-month period of calculation.

Effective January 1, 2013, except for employees who are within five years of their unreduced retirement date at that time, the bill (i) restricts cost of living adjustments (COLA) to those employees who reach the age for unreduced retirement benefits and (ii) reduces the COLA to the first two percent of inflation plus one-half of the next two percent, for a maximum total of three percent. Under current law, the COLA is the first three percent of inflation plus one-half of the next four percent, for a maximum total of five percent.

Finally, for state and local employees hired on or after January 1, 2013, other than law-enforcement employees and judges, the bill reduces the multiplier from 1.7 to 1.6.

This bill was incorporated into HB 1130.

SUMMARY AS INTRODUCED:

Virginia Retirement System; defined benefit plan.  Modifies several provisions of the defined benefit retirement plan. Beginning January 1, 2013, the bill changes the calculation of average final compensation to cover a period of 60 months rather than 36 months. Under current law, the use of a 60-month period applies only to those employees hired on or after July 1, 2010. However, current employees affected by this change in average final compensation may use the 36-month period of calculation for compensation received prior to January 1, 2013, if it is greater than the 60-month period of calculation.

Effective January 1, 2013, except for employees who are within five years of their unreduced retirement date at that time, the bill (i) restricts cost of living adjustments (COLA) to those employees who reach the age for unreduced retirement benefits and (ii) reduces the COLA to the first two percent of inflation plus one-half of the next two percent, for a maximum total of three percent. Under current law, the COLA is the first three percent of inflation plus one-half of the next four percent, for a maximum total of five percent.

The bill also increases the employee contribution rate from five percent to six percent for all state employees, and members of the State Police Officers' Retirement System, and the Virginia Law Officers' Retirement System. For current employees, this increase in employee contributions is phased in increments of one-half percent per year. Similarly, the cost of prior service credit that currently may be purchased at the rate of five percent of salary, is increased to six percent on July 1, 2013.

Finally, for state and local employees hired on or after January 1, 2013, other than law-enforcement employees and judges, the bill reduces the multiplier from 1.7 to 1.6.