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.
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