Virginia retirement system costs grow - NBC12 - WWBT - Richmond, VA News On Your Side

Virginia retirement system costs grow

RICHMOND, VA (WWBT) – Faced with a growing pension bill, state lawmakers have a difficult decision to make. Should state workers pay "more" into the Virginia retirement system? 

State workers now pay 5% of their salaries toward their own retirement. They used to pay nothing. The question is should they pay more? And what's the downside, if they do? 

Standing room only, at the capitol. There, the state's watchdog group got an earful on Virginia's retirement trust fund...and the beating it's taking on Wall Street. 

"These losses will continue to affect the plans for the next several years," said Tracey Smith, JLARC Senior Legislative Analyst. 

With assets down, and liabilities up...a new study laid out the options. Currently, state workers pay 5% of their salaries toward their own retirement. The study suggested that number could grow up to 9%. 

But state analysts stopped short of recommending the higher rate. 

"To require them to pay an additional amount beyond the current 5% into the retirement benefit will reduce their ability to save in other ways," she said. 

In addition to retirement, Virginia salaries were also studied. The state payroll was criticized as being only "marginally competitive" with other employers.

The workforce association head was quick to agree. 

"The clear message was, you tinker with the benefit structure, the state's not gonna be competitive for recruiting and retaining its employees," said Ron Jordan with the Virginia Governmental Employees Association. 

Instead, the study unveiled here laid out several other proposals, including private retirement accounts, similar to a 401-(k).    

"We do feel like, sort of, forcing higher savings over time would be one improvement," Smith said. 

No, decisions though. Just realities and recommendations. 

Only the governor and his top budget advisors know what's coming next. 

"The governor's been playing it pretty close to the vest. We'll just have to wait and see next week," said Jordan. 

Lawmakers wondered if it's legal to change retirement or other benefits for people who are already working for the state. Analysts suggested it is, but lawmakers could decide that any changes only affect "new" hires. 

Governor Bob McDonnell will unveil his two-year budget proposal one week from today.

Copyright 2011 WWBT NBC12. All rights reserved.

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