VGEA eNews - Pension Changes Passed! Page 1 of 6
In this issue: March 15, 2012
What Bills are
Save Money on Auto
Pension Changes Landmark Pension Changes; VGEA
Protects Current Employees, Retirees
Still No Budget
The final order of business before the General Assembly adjourned last Saturday
Meetings was the adoption of pension reform bills. These bills combined elements of both the
House and Senate approaches to state pension reform that we previously explained
at length in the eNews (past issues available at www.vgea.org).
Possible The VGEA successfully fought to have the conference reports on HB 1130 and SB
498 protect all current retirees and current state employees (those already vested in
the Virginia Retirement System(VRS)) from changes in their retirement program.
Plan 1 employees with less than five years of service (who are not vested, therefore
General Assembly not yet entitled to receive any benefit) and Plan 2 employees (hired after July 1,
2010) will see some changes. This is a reversal of the proposals advanced by the
Legislative Bill Governor that would have affected all employees except those within five years
List 2012 of retirement eligibility. The Governor's proposal would also have increased the
Potentially employee contribution rate for state employees from 5% to 6% of pay without
any corresponding permanent pay increase.
Employees For non-vested Plan 1 employees and all Plan 2 employees, the changes include
Caps the annual Cost of Living Adjustment (COLA) at 3%
Changes the average final compensation (AFC) calculation from the highest
36 months to the highest 60 months (this is already the case for Plan 2
Reduces the retirement multiplier form 1.70% to 1.65%.
The only change affecting all current employees is that anyone retiring with
fewer than 20 years service will not be eligible for a COLA until they reach
retirement age or eligibility.
The single largest change in the conference reports for HB 1130 and SB 498 affects
VGEA eNews - Pension Changes Passed! Page 2 of 6
new employees, who will be enrolled in a new hybrid pension plan. This new
pension program (a combination of a traditional defined benefit plan and a defined
contribution or 401(k) style plan) will be mandatory for all new state (including judges
and higher education), local (including constitutional officers) and school division
employees, beginning January 1, 2014. Higher education faculty would have the
choice of the hybrid or an existing 401(k) style plan while personnel in the various
state and local public safety pension plans would be excluded.
While some hybrid plans have merit, the plan proposed in the conference report is
constructed in a way that is counter to every successful state hybrid plan currently in
use across the country, and will not provide adequate income replacement at
retirement. For those reasons, the VGEA was opposed to this plan.
The new plan consists of two components:
A list of the bills in the
state legislature that The traditional defined benefit component includes a 1.0% multiplier designed to
provide about 30% of the highest average compensation after 30 years service. In
VGEA identified as
contrast, current employees have a 1.7 % multiplier designed to provide about 51%
potentially having an of the highest average compensation after 30 years service. The employee will be
affect on state required to contribute 4% pay to this portion with the balance provided by employer
employees can be according to rates established by the VRS.
viewed on the home
page of the VGEA The defined contribution or 401(k) style part of the plan includes a mandatory
website at any time: employee contribution of 1% that will be matched by the employer dollar for dollar.
www.vgea.org in the This plan portion also contains a feature that allows the employee to optionally
Legislative Advocacy contribute up to an additional 4% with the employer matching up to 2.5%. The plan is
section or click here set up to automatically deduct those optional amounts, however the employee may
opt out of the optional increases.
for the final active bill
list as of March 15. The VRS has developed several investment options to help employees who do not
The Assembly will have investment expertise or who don't want to actively manage their investments.
reconvene on March We will elaborate more on this in the future.
21 to finish work on
the budgets. The VGEA remains opposed to this plan for the following reasons:
A National Association of State Retirement Administrators report issued four
Quick Links months ago found that Georgia, Michigan (teachers) and Utah have most
recently adopted new mandatory hybrid plans. In each instance, the cost of
Latest News on the defined benefit component is borne in large part by the employer with the
VGEA's Website employee's contribution allocated to the defined contribution 401(k) side.
Comment on VGEA's Virtually every one of the state hybrid plans adopted over the years has
Facebook Page embodied this same approach. The rationale is to ensure that the employee
will have contributed a sufficient amount through his defined contribution 401
Virginia Retirement (k) so that the combined benefit provides adequate income replacement at
System (VRS) retirement. The plan in the conference report does the opposite.
SCHOLARSHIP JLARC constructed a hybrid model in its recent study that is identical to the
Money Available! one in the substitute. That scenario assumed that an employee would work 37
years and retire at age 67. JLARC found that the employee contribution rate
must increase to 9 percent throughout their career to ensure that he would
have sufficient income replacement at retirement. This is highly unlikely for
the many lower paid state employees such as janitors, hospital aides, VDOT
equipment operators, clerks and similar employee groups.
JLARC also concluded this was unlikely since most employees who currently
Did you know that the retire have an average of 23 years service. Much of this is attributable to the
VGEA offers fact that many employees (especially higher education faculty choosing the
TWO $2500 defined benefit program) come to work for the state at a later age.
VGEA eNews - Pension Changes Passed! Page 3 of 6
As a result of the VGEA's opposition, the Governor and the lead conferees on the
SCHOLARSHIPS bills, Senator John Watkins (R-Powhatan) and Delegate Chris Jones (R-Suffolk),
each fall for members, agreed to review alternative hybrid proposals that VGEA might advance that
their spouses would address its concerns. Work has already begun in this regard and we will
and/or their report on its progress in later editions of eNews.
children? It's easy to
get more information
and apply. Just click
Still No Budget! Special Session to Begin Next Week
APRIL 6! After adjourning the 2012 regular General Assembly
session last Saturday without adopting a budget, the
Assembly will convene in a special session on March 21.
Join Our List It's likely the special session will begin with only the six
designated budget negotiators from each house present.
This group is expected to hammer out a budget
compromise, and then the rest of the 140 members will
return to Richmond to vote.
Paying a TON As eNews previously reported, Senate attempts during
the regular session to pass a budget failed with all 20
For Auto Senate Republicans voting to approve the bills and all
Insurance? 20 Democrats voting no or not voting. The Virginia
Constitution requires that the budget bill be approved by
a majority vote of the members elected in each house. That means 21 votes are
required in the Senate and 51 votes in the House of Delegates. Because the
Lieutenant Governor is not an elected member of the Senate he can't vote to break a
tie on the budget (however he can and has used his tie-breaking vote for other
things). Senate Democrats continue to insist on some measure of power sharing in
the evenly divided Senate, while also voicing concerns about insufficient funding for
public education, health and human services and transportation. These issues must
be resolved among the Senators before any agreed upon budget bill can advance.
Prior to adjourning the regular session on Saturday, both houses amended their
Click here to contact rules to allow the new budget bills (HB 1300 and HB 1301) that had been introduced
Elephant Insurance by Delegate Lacey Putney to be considered in the special session. This eliminates
today for a free auto the need to reintroduce budget bills a third time.
insurance quote. VGEA
members get an Items under consideration for state employees include a 2% state employee pay
additional 15% off their raise effective July 2013, a 3% bonus effective December 2012, and health
already competitive insurance fund protections. The VGEA will continue to work with the budget
pricing! You MUST be a conferees on these matters during the special session.
VGEA member to
receive the discount,
and select Virginia
Don't Miss Your VGEA Regional Meeting!
as your Affinity Group. Northern REGIONAL MEETING: Fredericksburg, Sat.,
Request your Elephant March 24, 11 a.m. to 2 p.m.
Insurance quote online
now or call 1-877- (Registration begins at 10:30 a.m. and lunch served at 12:30 p.m.) at the University
TRUNK (1-877-218- of Mary Washington, Stafford Campus, South Building, Rooms 227-228, 121
7865) and be sure to University Boulevard, Fredericksburg, VA 22406
ask for your VGEA
member discount. Current and Prospective VGEA Members from Northern Virginia are invited to join
VGEA Board Members and Staff for a barbecue lunch event on Saturday, March 24.
VGEA Job Meet and mingle with other Virginia Governmental Employees Association members
and to hear about topics of interest to members, including General Assembly
updates and details about new benefits. Admission is FREE to current and
prospective VGEA members, so please bring a co-worker to introduce him or her to
VGEA eNews - Pension Changes Passed! Page 4 of 6
the VGEA. Please RSVP to Teresa Craig at email@example.com by March 21 so an
accurate food order can be placed. Thanks and we look forward to seeing you then!
Southwest REGIONAL MEETING: SAVE THE DATE!
Abingdon, Thurs., April 5, 5 to 8 p.m.
Association (Dinner for all VGEA Members and Prospective Members) at the Southwest Virginia
Higher Education Center, One Partnership Circle, Abingdon, VA 24212, Rooms 103
Fiscal and 104 - Look for Signs!
Southwest Virginia Current and Prospective VGEA Members are invited to join us for
(Membership Services dinner on Thursday, April 5, to meet and mingle with other Virginia Governmental
Specialist, part-time). Employees Association members and to hear about topics of interest to members,
including General Assembly updates and details about new benefits. Admission is
Click here for more FREE to current and prospective VGEA members, so please bring a coworker
details and to apply. to introduce him or her to the VGEA. RSVP by April 2 to Teresa Craig by email
Employee Retirement Contribution
Increase Still Alive
The Governor's proposed increase in the employee contribution rate for state
employees from 5% to 6% of pay "is still on the table" according to remarks made by
Senator John Watkins in a briefing to the full Senate on proposed pension changes
last Saturday evening. Watkins indicated that the Governor was still insisting on the
increase and that the issue would be taken up in discussions while resolving the
budget impasse later next week.
General Assembly Legislation Passed
The General Assembly adjourned last Saturday at 9:30 p.m. During the 60 days
legislators spent at the capitol, 1,616 of the original 2,876 bills introduced were
approved. A compromise on the budget has yet to be reached, so the Assembly will
reconvene March 21 at 3 p.m. for the 2012 Legislative Special Session.
That day only two lawmakers from each body must be present to continue the
Special Session, while the real work remaining from the 2012 regular session -- the
state budget -- will be negotiated separately by a legislative "conference committee."
Once a compromise is reached, all 140 legislators will return to vote on the budget.
The following is list of legislation enacted during the session:
Members of the General Assembly passed legislation requiring all outdoor alcohol
advertisements to be in compliance with ABC and VDOT laws and regulations.
Passage of workers' compensation exclusion for policies where jurisdiction falls
under either the Longshore and Harbor Workers' Compensation Act or the Merchant
Marine Act of 1920. There is also legislation allowing credits for investments in a
renewable energy portfolio standard program. Additionally, amendments providing
for fire insurance coverage for services of volunteer fire departments were approved.
Legislation requiring Amazon to collect and remit sales tax from online retail
purchases was adopted this session.
Courts & Civil Law
Both bodies passed legislation allowing for the use of affidavits in no-fault divorce
VGEA eNews - Pension Changes Passed! Page 5 of 6
cases in lieu of oral testimony. Legislation limiting the liability of ski resorts and other
winter sports area operators will be communicated to the governor.
Legislation providing that first offenders of DUIs be required to have an ignition
interlock as a condition of a restricted license passed both bodies.
The Commonwealth will soon be a participant in real-time electronic recordkeeping
for the nonprescription sale of compounds used in methamphetamine creation.
A bill requiring local school boards to adopt and implement policies for the
administration of epinephrine was adopted by both bodies and will be communicated
to the governor. A requirement for the Board of Education to develop licensure
criteria for teachers who teach only online courses is also soon to be put in place.
Voter Identification requirements eliminating sworn statements as basis for casting
provisional ballots passed the legislature. Amendments expanded the forms of
accepted identification to include: student identification cards issued by Virginia four-
year institutions, utility bills, pay stubs and government checks. Provisional ballots
may still be cast and will be counted if proper identification is provided, mailed or
faxed within six days.
Several bills providing a preference in the state government hiring process for
members of the Virginia National Guard and spouses and children of veterans who
were killed in active duty were adopted by both chambers.
Reproductive rights received heavy public and media scrutiny this session. Gov.
McDonnell has already signed into law requirements mandating that women undergo
trans-abdominal ultrasounds before abortion procedures. Legislation creating a
cause for action for the death of a fetus through neglect or wrongful acts was also
established. No cause of action for the death may be brought against the natural
mother of the fetus. Legislation allowing state funded private adoption agencies to
withhold placement services on grounds of moral conscience is expected to be
signed by the Governor.
Militia & Police
Two pieces of legislation were passed lowering restrictions on current gun laws:
A repeal of the current prohibition on the ability to purchase more than one
gun in a 30-day period passed both chambers this session
There was also the removal of fingerprint requirements as a part of the
application process for concealed handgun permits
Legislation directing the Virginia Soil and Water Conservation Board to adopt
regulations governing the certification of certain nutrient credits was established. The
responsibilities of the Chesapeake Bay Local Assistance Board were absorbed by
the Virginia Soil and Water Conservation Board. Legislators also integrated elements
of the Erosion and Sediment Control Act, the Stormwater Act and the Chesapeake
Bay Preservation Act in order to establish consolidated and consistent regulatory
The Governor's Agriculture and Forestry Industries Development Fund was
established as a grant and loan program targeted at agricultural and forestry
operations. A measure providing that any remaining coal or void left by coal removal
shall remain the property of the owner or lessee of the mineral estate awaits the
VGEA eNews - Pension Changes Passed! Page 6 of 6
Legislation adding individuals to the list of persons required to report suspected child
abuse or neglect was approved by the General Assembly. The legislation also
shortened the time limit for reporting from 72 to 24 hours. Another bill to shorten the
window in which vital records, including birth, death, marriage and divorce
certificates become public is expected to become law.
Disabled veterans and their surviving spouses will now receive property tax
exemptions. An expansion of the Neighborhood Assistance Act Tax Credit program
allows for nonprofits that provide educational scholarships to apply for tax credits.
Roll-your-own cigarette machines will now fall into the same tax designation as other
Virginia motorcycle drivers may now drive two abreast. Legislation providing uniform
methods of assigning cost-based fees calibrated by the amount that a vehicle is
overweight passed the General Assembly. The use of HOV lanes has been
expanded to include vehicles with clean special fuel license plates.
Efforts barring registered sex offenders from operating charter buses transferring
children to and from day care and other certain children's activities were passed.
This email was sent to firstname.lastname@example.org by email@example.com |
Virginia Governmental Employees Association | 1011 East Main Street, Suite 400 | Richmond | VA | 23219