~Thom
Think Before You Mess With VRS!
There seems less certainty now regarding how the session will address VRS reform. That is good news. A knee-jerk reaction to the Governor’s Chicken Little rhetoric could have a negative impact upon the ability of the commonwealth to attract and retain high quality personnel and, there are legitimate questions regarding the adequacy of some of the proposals on the table to afford retirees some dignity in their final years.
It seems that if we are going to take a rational approach in regard to Virginia Retirement System reform, some questions should be answered regarding the pending retirement legislation and the degree to which they will “fix” VRS.
1. Does changing who pays the 5% employee contribution add one cent to the fund?
2. Is there a danger that current retirees won’t get their checks in the years ahead?
3. Does creating a defined contribution plan for future hires, be it optional or mandatory, reduce the $17.6 billion unfunded liability of VRS?
4. If we adhere to the ten year repayment schedule, in regard to last year’s VRS contribution shortfall, and; from this day forward, honor the VRS Board of Trustee’s certified rate; won’t we achieve a sounder funding status? If we follow this path, isn’t it likely that we will move to a much firmer footing within a decade?
5. Isn’t the actuarial horizon of the $17.6 billion rather long? Consequently, don’t we have decades to address this problem?
6. I keep hearing that the current system is not sustainable. Isn’t it a fact, that if we bite the bullet and pay the certified rate that the system is sustainable?
7. Aren’t the high anticipated contribution rates, which will be a burden in the short-run, just a repayment for our failure to make appropriate contributions most of the time over the past twenty years?
8. In the 2008 JLARC report on state compensation, PricewaterhousCoopers found that the defined contribution model in the report d would provide 52% of the replacement income of the current defined benefit plan. Shouldn’t we take the time to do this same kind of analysis on each proposal to know the expected consequence of each on those that will retire after years of honorable service to the commonwealth?
Your legislators, both delegates and senators, are heading home for the weekend. Look for a chance, by letter, call, email or in face-to face conversation to ask them if this isn’t just too big an issue to address in a short session when so many questions remain unanswered.
