McDonnell asks for employee contribution to retirement plans
Governor McDonnell is asking state workers to begin contributing to the state’s strained retirement system for the first time in 27 years. Craig Carper reports.
Virginia is one of only four states that pay state workers' contributions to their pensions. Governor McDonnell is now proposing that state employees pay five percent of their pre-tax salaries toward the Virginia Retirement System, or VRS, next year. To offset the reduction in take-home pay, McDonnell will give state workers a three percent raise, the first they have seen in four years.
McDonnell: The retirement system currently has 17.6 billion dollars in unfunded liability. Currently, the system is funded at about 75 percent of its future liabilities but we have been told by the VRS board that number will decline to 61 percent by 2014.
I am determined that I am not going to pass on this problem to another governor, and we’re going to take action this year to implement reforms that are bold, that call for shared sacrifice in order to try to get our retirement system back on solid footing.
Earlier this year, the General Assembly skipped 675 million dollars in state payments to the VRS to help close the 4.6 billion dollar budget shortfall, a decision Governor McDonnell said he disagreed with, but reluctantly signed at the time. Now McDonnell says he will increase contributions to VRS by 4 percent to offset last year’s deferred payments.
Craig Carper, WCVE News, Capitol Square