SB70: Virginia Retirement System; employer contributions.
Be it enacted by the General Assembly of Virginia:
1. That § 51.1-145 of the Code of Virginia is amended and reenacted as follows:
§ 51.1-145. Employer contributions.
A. The total annual defined benefit employer
contribution for each employer, expressed as a percentage of the annual
membership payroll, shall be determined in a manner so as to remain relatively
level from year to year. Each employer shall contribute for the defined
benefit plans, including the defined benefit component of the hybrid retirement
program under § 51.1-169, an amount equal to the sum of the normal
contribution, any accrued liability contribution, and any supplementary
contribution, as well as amounts required for the defined contribution
component of the hybrid retirement program under § 51.1-169. The defined
benefit contribution rates for each employer shall be determined after
each valuation biennially and shall remain in effect until a new
biennial valuation is made. All defined benefit contribution rates
shall be computed in accordance with recognized actuarial principles on the
basis of methods and assumptions approved by the Board and as described in
the Retirement System funding policy.
B. The normal employer defined benefit contribution for any period shall be determined as a percentage, equal to the normal contribution rate, of the total covered compensation of the members employed during the period.
C. The normal defined benefit contribution rate for any
employer shall be determined as the percentage represented by the ratio of (i)
the annual normal cost to provide the benefits of the retirement system
Retirement System with respect to members employed by the employer in
excess of the members' contributions to (ii) the total annual compensation of
the members.
D. The accrued defined benefit liability contribution for any employer for any period shall be determined as a percentage, equal to the accrued liability contribution rate, of the total compensation of the members during the period.
E. The accrued defined benefit liability contribution
rate for any employer shall be a percentage of the total annual compensation of
the members, determined so that a continuation of annual contributions by the
employer at the same percentage of total annual compensation over a period of
40 years determined by the Board consistent with recognized actuarial
principles and the Retirement System funding policy will be sufficient to
amortize the unfunded accrued liability with respect to the employer.
F. The unfunded defined benefit accrued liability with
respect to any employer as of any valuation date shall be determined as the
excess of the actuarial accrued liability over the sum of assets of the
Retirement System as of the valuation date, as follows: (i) the then
present value of the benefits to be provided under the retirement system
Retirement System in the future to members and former members over (ii) the
sum of the assets of the retirement system Retirement System then
currently in the members' contribution account and in the employer's retirement
allowance account, plus the then present value of the stipulated contributions
to be made in the future by the members, plus the then present value of the
normal contributions expected to be made in the future by the employer.
G. The supplementary defined benefit contribution for any employer for any period shall be determined as a percentage, equal to the supplementary contribution rate, of the total compensation of the members employed during the period.
H. Until July 1, 1997, the supplementary contribution rate for any employer shall be determined as the percentage represented by the ratio of (i) the average annual amount of post-retirement supplements, as provided for in this chapter, which is anticipated to become payable during the period to which the rate will be applicable with respect to former members to (ii) the total annual compensation of the members.
I. The Board shall certify to each employer the applicable defined benefit contribution rate and any changes in the rate. The Board shall also provide the applicable estimated defined contribution amounts to each employer.
J. The defined benefit employer contribution for the year shall be increased to the extent necessary to overcome any insufficiency if the contributions for any employer, when combined with the amount of the retirement allowance account of the employer, are insufficient to provide the benefits payable during the year.
K. The appropriation bill which that is
submitted to the General Assembly by the Governor prior to each regular session
that begins in an even-numbered year shall include the defined benefit
employer contributions which that will become due and payable
to the retirement allowance account from the state treasury during the
following biennium, an estimate of all state employer defined contribution
amounts required by § 51.1-169, and amounts for contributions to applicable
ancillary benefits as otherwise required by this title. The amount of the
defined benefit contributions shall be based on the contribution rates
certified by the Board pursuant to subsection I of this section that are
applicable to the Commonwealth as an employer and the anticipated compensation
during the biennium of the members of the retirement system
Retirement System on behalf of whom the Commonwealth is the employer.
K1. L. The General Assembly shall set defined
benefit contribution rates that are at least equal to the following
percentage of the contribution rates certified by the Board pursuant to
subsection I:
1. For members who are state employees as defined in § 51.1-124.3 and who are participating in a retirement plan established pursuant to Chapter 1 (§ 51.1-124.1 et seq.), (i) 67.02 percent for fiscal years beginning July 1, 2012, and July 1, 2013, (ii) 78.02 percent for fiscal years beginning July 1, 2014, and July 1, 2015, (iii) 89.01 percent for fiscal years beginning July 1, 2016, and July 1, 2017, and (iv) 100 percent for fiscal years beginning on or after July 1, 2018;
2. For members who are teachers as defined in § 51.1-124.3 and who are participating in a retirement plan established pursuant to Chapter 1 (§ 51.1-124.1 et seq.), (i) 69.53 percent for fiscal years beginning July 1, 2012, and July 1, 2013, (ii) 79.69 percent for fiscal years beginning July 1, 2014, and July 1, 2015, (iii) 89.84 percent for fiscal years beginning July 1, 2016, and July 1, 2017, and (iv) 100 percent for fiscal years beginning on or after July 1, 2018;
3. For members participating in a retirement plan established pursuant to Chapter 2 (§ 51.1-200 et seq.), (i) 75.84 percent for fiscal years beginning July 1, 2012, and July 1, 2013, (ii) 83.90 percent for fiscal years beginning July 1, 2014, and July 1, 2015, (iii) 91.95 percent for fiscal years beginning July 1, 2016, and July 1, 2017, and (iv) 100 percent for fiscal years beginning on or after July 1, 2018;
4. For members participating in a retirement plan established pursuant to Chapter 2.1 (§ 51.1-211 et seq.), (i) 75.82 percent for fiscal years beginning July 1, 2012, and July 1, 2013, (ii) 83.88 percent for fiscal years beginning July 1, 2014, and July 1, 2015, (iii) 91.94 percent for fiscal years beginning July 1, 2016, and July 1, 2017, and (iv) 100 percent for fiscal years beginning on or after July 1, 2018; and
5. For members participating in a retirement plan established pursuant to Chapter 3 (§ 51.1-300 et seq.), (i) 83.98 percent for fiscal years beginning July 1, 2012, and July 1, 2013, (ii) 89.32 percent for fiscal years beginning July 1, 2014, and July 1, 2015, (iii) 94.66 percent for fiscal years beginning July 1, 2016, and July 1, 2017, and (iv) 100 percent for fiscal years beginning on or after July 1, 2018.
L. M. In the case of all teachers whose
compensation is paid exclusively out of funds derived from local revenues and
appropriations from the general fund of the state treasury, the Commonwealth
shall contribute to the extent specified in the appropriations
appropriation act. In the case of any teacher whose compensation is paid
out of funds derived in whole or in part from any special fund or from a
contributor other than the Commonwealth or a political subdivision thereof,
contributions shall be paid out of the special fund or by the other contributor
in proportion to that part of the compensation derived therefrom. In the case
of all state employees whose compensation is paid exclusively by the
Commonwealth out of the general fund of the state treasury, the Commonwealth
shall be the sole contributor, and all contributions shall be paid out of the general
fund. In the case of a state employee whose compensation is paid in whole or in
part out of any special fund or by any contributor other than the Commonwealth,
contributions on behalf of the employee shall be paid out of the special fund
or by the other contributor in proportion to that part of the employee's
compensation derived therefrom. The governing body of each political
subdivision is hereby authorized to make appropriations from the funds of the
political subdivision necessary to pay its proportionate share of contributions
on behalf of every state employee whose compensation is paid in part by the
political subdivision. In the case of each person who has elected to remain a
member of a local retirement system, the Commonwealth shall reimburse the local
employer an amount equal to the product of the compensation of the person and
the employer contribution rate as used to determine the employer contribution
for state employees under this section. Each employer shall keep such records
and periodically furnish such information as the Board may require and shall
inform new employees of their duties and obligations in connection with the
retirement system Retirement System.
M. N. The employer defined benefit
contribution rate established for each employer may include the cost to
administer any defined contribution plan administered by the Virginia
Retirement System and available to the employer. The portion of such
contribution designated to cover administrative costs of the defined
contribution plans shall not be deposited into the trust fund established for
the defined benefit plans but shall be separately accounted for and used solely
to defray the administrative costs associated with the various defined
contributions contribution plans. This provision shall supplement
the authority of the Board under §§ 51.1-124.22 and 51.1-602 to charge and
collect administrative fees to employers whose employees have available the
various defined contribution plans administered by the Virginia Retirement
System.
N. Notwithstanding the foregoing, the total employer
contribution for each employer authorized to participate in the hybrid
retirement program described in § 51.1-169 for any period, expressed as a
percentage of the employer's payroll for such period, shall be established as
the contribution rate payable by such employer with respect to its employees
enrolled in the defined benefit plan established under this chapter. The
employer's contribution shall be first applied to the defined contribution
component of the hybrid retirement program described in § 51.1-169, and the
remainder shall be deposited in the employer's retirement allowance account.
O. Institutions of higher education shall also pay contributions to the employer's retirement allowance account in amounts representing the difference between the contribution rate payable with respect to employees enrolled in the defined benefit plan under this chapter and the employer contributions paid to any optional retirement plan it offers on behalf of any of its nonfaculty Covered Employees, as described in §§ 23.1-1020 through 23.1-1026. The employer contribution rate established for each employer may include the annual rate of contribution payable by such employer with respect to employees enrolled in the optional defined contribution retirement plans established under §§ 51.1-126, 51.1-126.1, 51.1-126.3, and 51.1-126.4.
O. P. Employer contributions may be returned to
the employer only as determined in accordance with § 401(a) of the Internal
Revenue Code, as amended or renumbered, and the regulations thereunder
applicable to governmental plans.
Q. Additionally, employers shall pay contributions as determined by the Retirement System for applicable ancillary benefits as otherwise required by this title.
2. That the provisions of the first enactment of this act shall become effective on July 1, 2024.
3. That, notwithstanding the provisions of the second enactment of this act, beginning July 1, 2022, the Virginia Retirement System is authorized to communicate the forthcoming changes, update data systems, and train Virginia Retirement System employers to ensure a coordinated and seamless transition upon implementation of the provisions of the first enactment of this act and to develop procedures for the separation of defined benefit and defined contribution amounts prior to the implementation of the provisions of the first enactment of this act.
SENATE BILL NO. 70
Be it enacted by the General Assembly of Virginia:
1. That § 51.1-145 of the Code of Virginia is amended and reenacted as follows:
§ 51.1-145. Employer contributions.
A. The total annual defined benefit
employer contribution for each employer, expressed as a percentage of the
annual membership payroll, shall be determined in a manner so as to remain
relatively level from year to year. Each employer shall contribute for the defined benefit plans, including the
defined benefit component of the hybrid retirement program under § 51.1-169,
an amount equal to the sum of the normal contribution, any accrued liability
contribution, and any supplementary contribution,
as well as amounts required for the defined contribution component of the
hybrid retirement program under § 51.1-169.
The defined benefit contribution rates
for each employer shall be determined after each valuation biennially and shall remain in
effect until a new biennial
valuation is made. All defined benefit
contribution rates shall be computed in accordance with recognized actuarial
principles on the basis of methods and assumptions approved by the Board and as described in the Retirement System
funding policy.
B. The normal employer defined benefit contribution for any period shall be determined as a percentage, equal to the normal contribution rate, of the total covered compensation of the members employed during the period.
C. The normal defined benefit
contribution rate for any employer shall be determined as the percentage
represented by the ratio of (i) the annual normal cost to provide the benefits
of the retirement system Retirement System with respect
to members employed by the employer in excess of the members' contributions to
(ii) the total annual compensation of the members.
D. The accrued defined benefit liability contribution for any employer for any period shall be determined as a percentage, equal to the accrued liability contribution rate, of the total compensation of the members during the period.
E. The accrued defined benefit
liability contribution rate for any employer shall be a percentage of the total
annual compensation of the members, determined so that a continuation of annual
contributions by the employer at the same percentage of total annual
compensation over a period of 40
years determined by the Board consistent with recognized
actuarial principles and the Retirement System
funding policy
will be sufficient to amortize the unfunded accrued liability with respect to
the employer.
F. The unfunded defined benefit
accrued liability with respect to any employer as of any valuation date shall
be determined as the excess of the actuarial
accrued liability over the sum of assets of the Retirement
System as of the
valuation date, as follows: (i) the then present value of the benefits to be provided under
the retirement system Retirement System in the
future to members and former members over (ii) the sum of the assets of the retirement system Retirement System then
currently in the members' contribution account and in the employer's retirement
allowance account, plus the then present value of
the stipulated contributions to be made in the future by the members, plus the then present value of the normal contributions expected
to be made in the future by the employer.
G. The supplementary defined benefit contribution for any employer for any period shall be determined as a percentage, equal to the supplementary contribution rate, of the total compensation of the members employed during the period.
H. Until July 1, 1997, the supplementary contribution rate for any employer shall be determined as the percentage represented by the ratio of (i) the average annual amount of post-retirement supplements, as provided for in this chapter, which is anticipated to become payable during the period to which the rate will be applicable with respect to former members to (ii) the total annual compensation of the members.
I. The Board shall certify to each employer the applicable defined benefit contribution rate and any changes in the rate. The Board shall also provide the applicable estimated defined contribution amounts to each employer.
J. The defined benefit employer contribution for the year shall be increased to the extent necessary to overcome any insufficiency if the contributions for any employer, when combined with the amount of the retirement allowance account of the employer, are insufficient to provide the benefits payable during the year.
K. The appropriation bill which that is submitted to the
General Assembly by the Governor prior to each regular session that begins in
an even-numbered year shall include the defined benefit
employer contributions
which that
will become due and payable to the retirement allowance account from the state
treasury during the following biennium, an estimate of all
state employer defined contribution amounts required by §
51.1-169, and amounts for contributions to applicable ancillary benefits as
otherwise required by this title.
The amount of the defined benefit
contributions shall be based on the contribution rates certified by the Board
pursuant to subsection I of this section
that are applicable to the Commonwealth as an employer and the anticipated
compensation during the biennium of the members of the
retirement system Retirement System
on behalf of whom the Commonwealth is the employer.
K1. L. The
General Assembly shall set defined benefit
contribution rates that are at least equal to the following percentage of the
contribution rates certified by the Board pursuant to subsection I:
1. For members who are state employees as defined in § 51.1-124.3 and who are participating in a retirement plan established pursuant to Chapter 1 (§ 51.1-124.1 et seq.), (i) 67.02 percent for fiscal years beginning July 1, 2012, and July 1, 2013, (ii) 78.02 percent for fiscal years beginning July 1, 2014, and July 1, 2015, (iii) 89.01 percent for fiscal years beginning July 1, 2016, and July 1, 2017, and (iv) 100 percent for fiscal years beginning on or after July 1, 2018;
2. For members who are teachers as defined in § 51.1-124.3 and who are participating in a retirement plan established pursuant to Chapter 1 (§ 51.1-124.1 et seq.), (i) 69.53 percent for fiscal years beginning July 1, 2012, and July 1, 2013, (ii) 79.69 percent for fiscal years beginning July 1, 2014, and July 1, 2015, (iii) 89.84 percent for fiscal years beginning July 1, 2016, and July 1, 2017, and (iv) 100 percent for fiscal years beginning on or after July 1, 2018;
3. For members participating in a retirement plan established pursuant to Chapter 2 (§ 51.1-200 et seq.), (i) 75.84 percent for fiscal years beginning July 1, 2012, and July 1, 2013, (ii) 83.90 percent for fiscal years beginning July 1, 2014, and July 1, 2015, (iii) 91.95 percent for fiscal years beginning July 1, 2016, and July 1, 2017, and (iv) 100 percent for fiscal years beginning on or after July 1, 2018;
4. For members participating in a retirement plan established pursuant to Chapter 2.1 (§ 51.1-211 et seq.), (i) 75.82 percent for fiscal years beginning July 1, 2012, and July 1, 2013, (ii) 83.88 percent for fiscal years beginning July 1, 2014, and July 1, 2015, (iii) 91.94 percent for fiscal years beginning July 1, 2016, and July 1, 2017, and (iv) 100 percent for fiscal years beginning on or after July 1, 2018; and
5. For members participating in a retirement plan established pursuant to Chapter 3 (§ 51.1-300 et seq.), (i) 83.98 percent for fiscal years beginning July 1, 2012, and July 1, 2013, (ii) 89.32 percent for fiscal years beginning July 1, 2014, and July 1, 2015, (iii) 94.66 percent for fiscal years beginning July 1, 2016, and July 1, 2017, and (iv) 100 percent for fiscal years beginning on or after July 1, 2018.
L. M. In the
case of all teachers whose compensation is paid exclusively out of funds
derived from local revenues and appropriations from the general fund of the
state treasury, the Commonwealth shall contribute to the extent specified in
the appropriations appropriation act. In the case
of any teacher whose compensation is paid out of funds derived in whole or in
part from any special fund or from a contributor other than the Commonwealth or
a political subdivision thereof, contributions shall be paid out of the special
fund or by the other contributor in proportion to that part of the compensation
derived therefrom. In the case of all state employees whose compensation is
paid exclusively by the Commonwealth out of the general fund of the state
treasury, the Commonwealth shall be the sole contributor, and all contributions
shall be paid out of the general fund. In the case of a state employee whose
compensation is paid in whole or in part out of any special fund or by any
contributor other than the Commonwealth, contributions on behalf of the
employee shall be paid out of the special fund or by the other contributor in
proportion to that part of the employee's compensation derived therefrom. The
governing body of each political subdivision is hereby authorized to make
appropriations from the funds of the political subdivision necessary to pay its
proportionate share of contributions on behalf of every state employee whose
compensation is paid in part by the political subdivision. In the case of each
person who has elected to remain a member of a local
retirement system Retirement System,
the Commonwealth shall reimburse the local employer an amount equal to the
product of the compensation of the person and the employer contribution rate as
used to determine the employer contribution for state employees under this
section. Each employer shall keep such records and periodically furnish such
information as the Board may require and shall inform new employees of their
duties and obligations in connection with the
retirement system Retirement System.
M. N. The employer defined benefit contribution
rate established for each employer may include the cost to administer any
defined contribution plan administered by the Virginia
Retirement System and available to the employer. The portion of such
contribution designated to cover administrative costs of the defined
contribution plans shall not be deposited into the trust fund established for
the defined benefit plans but shall be separately accounted for and used solely
to defray the administrative costs associated with the various defined contributions contribution plans. This provision
shall supplement the authority of the Board under §§ 51.1-124.22 and 51.1-602
to charge and collect administrative fees to employers whose employees have
available the various defined contribution plans administered by the Virginia Retirement System.
N.
Notwithstanding the foregoing, the total employer contribution for each
employer authorized to participate in the hybrid retirement program described
in § 51.1-169 for any period, expressed as a percentage of the employer's
payroll for such period, shall be established as the contribution rate payable
by such employer with respect to its employees enrolled in the defined benefit
plan established under this chapter. The employer's contribution shall be first
applied to the defined contribution component of the hybrid retirement program
described in § 51.1-169, and the remainder shall be deposited in the employer's
retirement allowance account.
O. Institutions of higher education shall also pay contributions to the employer's retirement allowance account in amounts representing the difference between the contribution rate payable with respect to employees enrolled in the defined benefit plan under this chapter and the employer contributions paid to any optional retirement plan it offers on behalf of any of its nonfaculty Covered Employees, as described in §§ 23.1-1020 through 23.1-1026. The employer contribution rate established for each employer may include the annual rate of contribution payable by such employer with respect to employees enrolled in the optional defined contribution retirement plans established under §§ 51.1-126, 51.1-126.1, 51.1-126.3, and 51.1-126.4.
O. P. Employer
contributions may be returned to the employer only as determined in accordance with
§ 401(a) of the Internal Revenue Code, as amended or renumbered, and the
regulations thereunder applicable to governmental plans.
Q. Additionally, employers shall pay contributions as determined by the Retirement System for applicable ancillary benefits as otherwise required by this title.
2. That the provisions of the first enactment of this act shall become effective on July 1, 2024.
3. That, notwithstanding the provisions of the second enactment of this act, beginning July 1, 2022, the Virginia Retirement System is authorized to communicate the forthcoming changes, update data systems, and train Virginia Retirement System employers to ensure a coordinated and seamless transition upon implementation of the provisions of the first enactment of this act and to develop procedures for the separation of defined benefit and defined contribution amounts prior to the implementation of the provisions of the first enactment of this act.