WVA DC to DB Migration Could Mean Big Savings

August 26, 2008 (PLANSPONSOR.com) - West Virginia lawmakers were informed Monday that the movement of nearly 15,000 teachers and educational workers from a defined contribution plan to a traditional pension plan will shave about $22 million off the state's retirement benefit expenses.

A Charleston Gazette news report said the estimate given to lawmakers by state actuary Harry Mandel was radically different from early statements that the DC to DB migration would actually cost the state as much as $78 million (See  WVA House Passes Pension Transfer Bill ). That was the estimated cost to subsidizepensions for teachers and service personnel who transferred to the Teachers Retirement System but had limited assets in their Teachers Defined Contribution (TDC) plans.

Mandel, actuary for the state Consolidated Public Retirement Board, told a legislative interim committee that surprisingly large numbers of TDC participants at or near retirement age did not transfer. However, he said, a surprisingly high percentage of under-40 teachers and service personnel voted to switch to TRS.

According to the newspaper, the retirement board had projected that nearly 100% of all teachers and service personnel age 65 or over would switch to the pension plan.

However, only half of TDC participants over age 70 transferred and only 69% in the 65-to-69 age group opted out. More than 75% of the 40-and-under age group voted to make the move.

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