McDonnell announced that he already has signed one version of the legislation, while proposing more than two dozen mostly technical amendments to a twin bill, reports The Richmond Times-Dispatch. McDonnell also proposed to give localities the option of phasing in a 5% raise required for teachers and local government employees, who will have to contribute 5% of their salaries to retirement.
According to The Richmond Times-Dispatch, the law changes requirements for years of service before retirement, the average final compensation and multiplier used to calculate benefits, and a cap on cost-of-living adjustments at 3% a year. The only change affecting all employees is a delay in the cost-of-living adjustment for employees who retire early with less than 20 years of service.
The legislation creates a mandatory hybrid retirement plan for all state and local employees hired on or after January 1, 2014, except for hazardous duty employees such as police, firefighters and rescue workers. The hybrid plan will combine reduced pension benefits and a 401(k)-style plan. Employees will pay 4% of salary toward their pension and 1% into the defined contribution (DC) plan. Government employers will pay a mandatory 1% to the DC plan, and up to 3.5% for employees who make the maximum allowable contributions of 9%.
Government employers also will have to pay the retirement rates set by Virginia Retirement System (VRS) and, for state employees and teachers, modified by the General Assembly, the news report said. The difference between those rates and the hybrid plan’s cost will be applied to the unfunded liabilities of the different retirement plans.
Employee groups oppose the pension changes (see “Va. State Workers Urge Veto of Retirement Overhaul”).
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