The bill (HB2984) would close the Teachers’ Defined Contribution program to new enrollees as of June 30 and reopen TRS as part of a pension reform package being pushed by Governor Joe Manchin, the Associated Press reported.
Chronic funding problems prompted lawmakers to close TRS and create the defined contribution plan in 1991. They also began a multi-decade payment schedule to shore up TRS, but it remains one of the worst-funded public pension plans in the country, according to the Associated Press report.
Manchin has proposed erasing the plan’s $5 billion shortfall through a bond proposal approved by lawmakers in January (See West Virginia Governor Vows Door Knocking Campaign for Pension Bond Initiative ). The bonds still require a statewide vote, slated for June 25, but lawmakers are banking on the fund’s restored solvency.
Several years of poor stock market returns spurred numerous complaints about the newer plan, and its enrollees have pushed to join TRS. As amended, the bill would allow these enrollees to vote next year on whether to merge with TRS.
More than 21,200 teachers are enrolled in the defined-contribution plan, while TRS counts 19,313 active members and 26,050 retirees.
As amended, Manchin’s pension bill also provides that:
- public employees cannot count payments from unused leave toward their retirement benefits
- people who retire from one public job and then take another cannot receive a pension from each. For troopers who retire after July 1 and then take a second job, the provision allows a benefit 5% higher than the salary of the second job.
- any benefit increase or cost-of-living adjustment to any public pension plan must be fully funded within 10 years. The law now requires full funding within five years.
The West Virginia initiative goes against the current trend of employers abandoning DB plans in favor of a DC program (See Northwest Airlines Latest to Propose DB to DC Move ).