A Message from the Chairman
The 2016 General Assembly session passed legislation to create the Commission on Employee Retirement Security and Pension Reform. The Commission is directed to study, report and make recommendations on various aspects of our state retirement plan and many other challenges facing our state workforce. This commission represents the best opportunity in years to build consensus on a series of reforms that are necessary to ensure the long-term solvency and strength of the retirement system upon which our hard-working state employees rely.
The General Assembly took significant steps this year to strengthen VRS, fully funding the annual required contribution and fully repaying previously deferred payments to VRS. While this is good news, there is significantly more work to be done. Our retirement system is only 71 percent funded, with unfunded liabilities exceeding $23 billion. The hybrid system reforms enacted several years ago were necessary changes, but the hybrid plan faces challenges of its own. Voluntary contribution rates are low, resulting in lower income replacement rates for employees. These are important issues that the Commission will have the opportunity to address.
The strength of our retirement system is also directly connected to the strength of our workforce. About 30 percent of our workforce is eligible to retire now or within the next five years. The five-year turnover rate for state employees is 54 percent. Retaining and attracting high-quality state employees requires a strong and modern retirement system. Aside from retirement, the state will need to be able to cope with the loss of highly-skilled and qualified employees who carry with them significant institutional knowledge. The Commission gives us the opportunity to evaluate the design of our retirement plan to ensure we are providing the best benefit to state employees, and to evaluate how the state should address the impending wave of retirements.
The overall compensation package provided to state employees is also an important part of the committee’s work. Current data indicates that state employees are paid between 20 and 25 percent less than their private sector counterparts. Younger generations value flexibility and portability in compensation and benefits packages. Salary compression is an ongoing challenge. The Commission will have the opportunity to evaluate Virginia’s overall compensation and benefits packages.
Retirement and pension reform can be a delicate topic. These issues are incredibly important and personal to all of the stakeholders involved. At times, it can seem like a zero-sum game where interests must compete for a larger slice of a shrinking pie. My goal is to create a commission to build consensus on solutions. Identifying the problems will be easy, but we must focus our work on solving them. We owe it to the citizens of the Commonwealth, especially the hardworking men and women who will be most impacted by our work, to offer ideas that will make our retirement system and state workforce stronger. In short, our goal is to find a way forward.
- Speaker William J. Howell
News & Updates
- Full Commission Meeting
July 10, 2017
1:00 p.m., House Room 3, Virginia State Capitol
- News & Updates
- Va. retirement panel to take hard look at high-fee alternative investments – Richmond Times-Dispatch
- Speaker's pension reform push faces budget headwinds, workforce concerns – Richmond Times-Dispatch
- Pay, not pension reform, may be first priority for state workforce – Richmond Times-Dispatch
- Howell elected Chairman of retirement commission