| STATE OF VERMONT |
HOUSE OF REPRESENTATIVES
March 4, 2021
Dear Vermont State Employee,
Over the past several weeks, we have seen a growing anxiety around conversations happening in the legislature on public employee pensions. I have seen a rise in misinformation and confusion on what is actually happening and why these discussions are occurring.
The reason I have prioritized this work is simple: our pension system is in critical need of change to stabilize the system and get it on track for long term stability. While these conversations are still evolving, I want to be clear: current retirees and those close to retirement do not need to panic and worry that their retirement plans are in jeopardy. This is a difficult topic, but we must take on this work to ensure that retirees and current employees have the peace of mind that their retirement benefit will be safe at the end of their career.
I have heard from many of you asking why I have prioritized working on pensions this year. I believe it is imperative that we have a secure pension program for you, our public employees, that provides meaningful retirement security after your years of service to the state. Furthermore, I want to make sure to highlight the scope of our pension system problems. New projections show that the unfunded pension liability for teachers and state employees will grow by another $604 million dollars in the coming year which would force the state to increase the annual contributions to the system by $96 million dollars. This is on top of the estimated $4.5 billion-dollar unfunded liability reported last year.
The growing unfunded liabilities, and further strain on our system, continues to occur even after recent years of the state fully funding the Actuarial Determined Employer Contribution (ADEC). Our pension system is in dire need for reform and we must all work together to make sure that we guarantee retirement for our teachers, state employees, and state police that have dedicated their lives to serving Vermont.
We are at this point because of a wide range of factors, including past investment performance, expected future investment performance, historical underfunding, and changing demographic trends. As it stands today, if we do not work together to make the necessary changes, the Vermont State Employees’ Retirement System (VSERS) and the Vermont State Teachers’ Retirement System (VSTRS) will not have enough assets to pay for the expected costs of the retirement benefits they will have to pay out in the future. This gap between assets and future costs has grown substantially in recent years, and without making any changes, it is expected to worsen in the future.
My message since the start of this work has been that everyone needs to be at the table, and we need to look at all options to help sustain our pension system. I know that there is a lot of information out there, but again, I want to be clear: we are still reviewing all of the options and there is no plan that would immediately go into effect and impact those that are close to retiring. The last thing we need as we go through this process is to create fear in Vermonters who have been working decades and planning for retirement.
In the past year, state employees have gone above and beyond to help assist Vermonters during this pandemic, and I know many of you have shifted roles or taken on more work to help get Vermont through this crisis. I cannot thank you enough for the long hours you have put in and your commitment to serving communities across the state. I am staying in constant communication with union representatives and receiving calls, emails, and letters from state employees that are incredibly helpful as we move through this process. I know that any time the legislature examines pensions, it can create fear and anxiety, but I need you to know I am taking on this effort to make sure the pension is sustainable for generations to come. Our state employees are essential and invaluable to Vermont and I want to make sure that you have peace of mind and financial security in retirement.
Rep. Jill Krowinski
Speaker of the House