- There was a discussion about how to send information to the actuaries, whether in packages or as individual items
- There was a discussion about revenues and the charge of the Taskforce under Act 75. Revenues can be considered.
- The Taskforce broke into subgroups by union to discuss what ideas to send to the actuaries to measure the impact on the fund. (These are not final decisions or recommendations. These are just changes that the Task Force would like to evaluate as they contemplate their midterm and final recommendations.)
1. The VSEA group met with Senator White and Representative Fagan. The package that was decided to send to the actuaries to research includes:
- Increased contributions with progressive tiers that increases the contribution rate as state employees incomes go up
- COLA Changes- limiting COLA’s to the first $24,000 of the pension, limiting COLA’s either until you reach full retirement age or allowing them until you reach full retirement age
- Recurring revenue from the employer at both $80 million and $30 million
- A 50/50 split between VSTERS and VSERS of the $150 million one-time funds or a plan to divide that money in thirds, with $50 million being spent to pay lump sum incentives for employees eligible for retirement to work longer if they agree to freeze their pension for that duration.
- Incentives to work longer and eliminate disincentives
- Run the actuarial report on the proposal to extend full retirement at age 55 after 20 years of service to those who currently qualify for the carve-out that allows retirement at age 55 without penalty but not full retirement. The scenarios will be run to be impact neutral and another scenario that includes the proposed changed contribution rates for Group C.
The VTA and Representative Gannon met and then joined the VSEA group to report on a package for Group C members.
- Increased employee contributions by 1.35% phased in over 3 years with an increase of .45% per year or 5 years at .27 %
- Progressive contributions
- Incentives to stay until age 57 rather than the mandatory retirement age of 55, while still allowing retirement at age 50 after 20 years
- Tied COLA to the assumed rate of return
- Risk Sharing
- One-time funding, requesting more than the $150 million
The Task Force set a date for the required public hearing: Monday, November 1, 2021, from 6:00 pm to 9:00 pm with each participant having 2 minutes to offer testimony.
There was a presentation by Treasurer Pearce on a memo she provide to the Task Force on the impacts of the underfunding of the Teachers’ Pension System, VSTERS. The impact on VSTERS is estimated by the Treasurer to be a $353 million dollar loss to their pension system.
The Taskforce heard reports from the 3 break-out groups, the reports included the 2 reports above as well as a report from the VSTERS group. The scenarios they are sending to the actuary include the following:
- Incentives to add 1% to final AFC up to 4 years with no carve-out
- Freezing the pension for teachers who have reached the requirements of the Rule of 90 or age 65 with no further contributions, allowing the teachers to either get cash or put money into a deferred compensation plan.
- COLA threshold at $48,000 50% of CPI and 25% of CPI over that.
- One time funds above ADEC, split 65% VSTERS and 35% to VSERS
- Recurring or dedicated revenue sources at $32.5 and $50 million above ADEC
- Tiered contribution- increases 5% to 6% and those at 6% would go to 6.5%
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