The refusal lets stand a circuit court decision blocking the planned merger of accounts of more than 20,000 teachers and school service employees enrolled in the 401(k)-style Teachers Defined Contribution plan (TDC) into the larger Teachers Retirement System plan (TRS). Kanawha Circuit Judge Paul Zakaib ruled the merger was unconstitutional because it amounted to an illegal taking of property of participants in the TDC plan (See W. Va Teachers’ Retirement Plan Merger Unconstitutional).
Several TDC participants argued the state had no right to their investment earnings, and Zakaib agreed, the AP said. The state Consolidated Public Retirement Board’s asked the high court to accept its appeal (See West Virginia Pension Board Appeals Plan Merger Ruling ).
According to the news report, the size of returns and what was perceived as bad investment advice from state-hired consultants spurred complaints from TDC account holders. The 2005 legislation allowing for the merger also closed the TDC to new enrollees and reopened TRS to future hires – a provision unaffected by the circuit court ruling.
Most voting account holders agreed to the merger in a 2006 special election, but dissenting enrollees sued.
Lawmakers have weighed options to improving the benefit prospects for TDC account holders, including allowing participants to transfer voluntarily to TRS. The TRS requires participants to contribute a higher percentage of their pay, and lawmakers debated whether to require transferees to pay makeup amounts to resolve the difference in contribution rates.
While the state has shored up its funding in recent years, the TRS is among the most poorly funded public pension plans. An $807 million from the sale of bonds backed by proceeds from West Virginia’s settlement with tobacco companies (See Bond Sale Boosts Funding for WV Teacher System) combined with $768 million devoted to the shortfall by the Legislature, helped raise its funding level above 51%, the news report said.