The Richmond Times-Dispatch reports that the Senate Finance Committee defeated two proposals, one by Governor Bob McDonnell, which would create such a plan, while the House Appropriations Committee approved a revised proposal that would give government employees the option to participate in a DC plan after January 1, 2012.
According to the news report, senators said they recognize the need for further reform to the Virginia Retirement System, but they said the issues are too complex and the stakes too high for quick action, and promised instead a comprehensive study to recommend actions next year.
The substitute for McDonnell’s proposal, approved by the House Appropriations Committee, would give current employees and new hires the option of managing their own defined-contribution retirement plan. Employees would pay 5% of pay, which the state would match, with an additional 3.5% contribution, for a total of 8.5%. In addition, the state or local government would pay a surcharge to the Virginia Retirement System to help pay the unfunded liabilities of pension plans, which would lose contributions as employees shifted to the 401(k)-style plan. The VRS Board of Trustees would determine the amount of surcharge.
The Virginia Education Association opposes any retirement plan other than the defined-benefit plan currently provided to teachers and other school personnel, but supported further study of the issues, the news report said.Last month, Republican delegate Chris Jones proposed a plan to place employees hired after January 1, 2012, into a 401(k)-style plan (see VA Lawmaker Proposes Pension Change).