Today the Senate Finance committee reported HB2251 which would establish an “optional” VRS defined contribution (DC) plan for employees hired after July 1, 2018. The recommendation for this plan came from the Commission on Retirement and Pension Reform that was established last session by Speaker Bill Howell. This is a plan he likes, but the Commission didn’t love. In fact, when the commission heard a report on an optional DC plan this summer Senator Hanger, Senator Norment, Delegate Jones, and VEA GR Director all voted against the recommendation to bring the DC plan up as legislation this session.
Regardless, the Speaker wants Virginia to have a DC plan, so the bill is here. Interestingly, Delegate Jones voted against the recommendation as a member of the Commission, but is carrying the bill for the Speaker. We knew the bill would pass the House, but we have talked with senators on both sides of the aisle and they are all saying it won’t pass in the Senate. Unfortunately, it reported out of committee today and will go to the floor of the Senate.
While this plan is “optional”, don’t be fooled. It is optional for now. DC plans are bad ideas for teachers. DC plans are sometimes good ideas for people who change jobs often or have career mobility within one department. They are also good for jobs where you have a fair amount of income growth over time. It is not good for teachers. Keep in mind, teachers are the largest group participating in VRS. What is good for us should matter.
To learn more about DC plans, please read this case study the National Institute on Retirement Security.
We will send out an action alert tomorrow urging your Senator to vote NO on HB2251.