I started my day in the House Appropriations Committee subcommittee on Compensation and Retirement as they took up two bills to create a defined contribution plan for future hires in Virginia. I summarized the retirement bills in an earlier posting. Delegate Jones’ HB2465 (the mandatory bill) was incorporated into Delegate Putney’s HB2410 (option bill).
On the House side, VEA stood alone in opposing the bill, and it was reported on the following recorded official vote:
YEAS--Jones, Tata, Ingram, May, Poindexter, Joannou, Ware, O.--7.
Soon after, in the Senate Finance Committee, Senator Watkins was carrying SB1008 and SB1115, which also would have created a defined contribution option for future hires. VEA was joined in opposition here by the firefighters, the state police, and the local police.
The unofficial vote on a motion from J. Howell to kill the bill (PBI) was as follows:
Yeas – Colgan, Wampler, Howell, Saslaw, Houck, Hanger, Y. B. Miller, Marsh, Lucas, Whipple and Reynolds
Nays – Stosch, Quayle and Watkins
I offered the following testimony in both chambers:
VEA by virtue of a long-held position of our board of directors supports the exclusive maintenance of the defined benefit plan.
Offering a defined contribution option to future hires has no impact on the VRS unfunded liability.
Adequate deliberation of the question before you should include the consideration of the impact of the plan on future retirees.
The DC model in the 2008 JLARC report on State Compensation according to PricewaterhouseCoopers would offer 52% of the benefit of the current plan. Can you tell us what the ultimate value to retirees of the plan before us?
Asking a 22 year-old new hire, who knows nothing about the virtues or risks of the various plans, to make an irrevocable elections of tremendous consequence is unwise and unfair.
This is too big an issue to address in this short session. There is over $50 billion in the fund – retirees will be paid. The actuarial horizon of the unfunded liability is 85 years. Please study a bit more before making this decision which is of tremendous consequence to future employees.