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2012 SESSION

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HB 1130 Retirement System; hybrid retirement program created, optional defined retirement plan created, etc.

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

SUMMARY AS PASSED:

Virginia Retirement System; hybrid defined contribution and defined benefit retirement program.  Creates a new hybrid retirement program, administered by the Virginia Retirement System, that contains a defined contribution and a defined benefit component. All new state employees, local employees, and judges commencing employment on or after January 1, 2014, would be required to participate in the hybrid plan. Employees in service on December 31, 2013, would be given the opportunity to make a one-time, irrevocable election to participate in the new hybrid program. The bill also creates a disability program for local employees participating in the hybrid plan.

The bill also makes adjustments to the existing defined benefit plan for nonvested employees, including lowering the retirement benefit multiplier from 1.7 to 1.65, basing average final compensation on 60 months of service instead of 36, and capping the cost-of-living adjustment at three percent. Any person with less than 20 years service who takes early retirement would not receive a cost-of-living adjustment until one year after he reaches normal retirement age. This bill is identical to SB 498.

SUMMARY AS PASSED HOUSE:

Virginia Retirement System; optional retirement plan.  Creates an optional defined contribution retirement plan for all state employees except employees currently eligible for optional retirement plans. The plan will be available beginning January 1, 2013. Persons first hired on or after January 1, 2013, shall make an irrevocable election to participate in the new defined contribution retirement plan or a VRS-administered defined benefit retirement plan.

The defined contribution retirement plan includes a required employee contribution of 5% and a corresponding mandatory contribution from the employer of 5%, with optional additional employee contributions of up to 3.5% which could be matched by another 3.5% from the employer. Maximum contributions to the defined contribution retirement plan are 8.5% from the employee and 8.5% from the employer, for a total of 17%.

The bill establishes a short-term and long-term disability plan for state employees who elect to participate in the defined contribution retirement plan.

SUMMARY AS INTRODUCED:

Virginia Retirement System; optional hybrid retirement plan.  Creates a new optional hybrid retirement plan with a defined benefit retirement plan component and a defined contribution retirement plan component for all state employees except judges and employees currently eligible for optional retirement plans. The plan will be available beginning January 1, 2014.

The defined benefit component has a multiplier of 1.0 and a required employee contribution of 4%, and the employer's contribution is actuarially determined using the same methodology used for the current defined benefit retirement plan. The defined contribution component includes a required employee contribution of 2% and a corresponding mandatory contribution from the employer of 1%, with optional additional employee contributions of up to 4% which could be matched by another 2.5 % from the employer. Maximum contributions to the defined contribution plan are 6% from the employee and 3.5% from the employer, for a total of 9.5%.

If a current employee elects to participate in the new plan, his accrued service in the defined benefit plan at the time of his election would transfer with a multiplier of the defined benefit plan from which he is leaving, but his service thereafter would accrue with a 1.0 multiplier.