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Local legislators concerned about proposals to temporarily cut retirement system payments to help balance budget Date published: 2/25/2010
BY CHELYEN DAVIS RICHMOND --As lawmakers prepare to cut $4 billion from the next two-year budget without raising taxes, they're looking to borrow from state employees' retirement to cover part of it.Gov. Bob McDonnell, the House Appropriations committee and the Senate Finance committee have all proposed a plan under which the state will contribute less than its share toward the Virginia Retirement System for the 2010-12 biennium. Doing so won't affect the money current retirees receive, and shouldn't affect individuals' retirement But it does require the state to put in more money in future years to make up for the loss, and some legislators think it sets a troubling precedent for borrowing from the VRS system. "It's bad fiscal policy," said Sen. Richard Stuart, R-Westmoreland, who said the proposal may force him to vote against the Senate's budget tomorrow. "We're failing to fund our obligations. We're basing our ability to repay it on assumptions that may or may not be correct." The state and local governments make contributions to the VRS for the retirement for each state employee and for local employees such as teachers. Those contributions are based on two formulas. One is the "normal" rate, which is what it would cost the state to pay the retirement for an employee if a list of actuarial assumptions are correct: if the employee's salary rises at the expected rate, if they retire at the normal time, if they live the expected number of years after retirement, and so on. The other part of the contribution level is called the Unfunded Actuarial Accrued Liability (or UAAL for short). This is the amount the state must set aside, over the normal rate, to account for unforeseen changes that might happen since an employee started work. Those unforeseen changes could be higher-than-expected pay raises, legislative changes to benefit packages, or gains or losses in VRS investments. What lawmakers are proposing is to pay only the "normal rate" part of the contribution (although the Senate's proposal is to pay the normal rate plus 20 percent of the UAAL). This would go on for two years, at which time the state would resume full payments, plus whatever is needed to make up for the two years of lower payments.
if your own world - would you reduce your contributions to
your 401K if your immediate needs were temporarily not
being met and you had to chose?
Of course the worry part is how long... 1 year, 2, 3, 5, 10
years.
Should your contributions to your 401K be a fixed number
or float according to your salary?
Notice that the contingency contribution is sort of a guess
but based also on future salary increases.
Since Virginia has a Medical Marijuana Law, How about allowing the sale of confiscated marijuana to legal patients and using that money instead of stealing my retirement?
Delegate Bell you sure blew it when you made a joke out of the effort by the citizens of Virginia to allow our Medical Marijuana Law to include MS, Alzheimer's Chronic Pain, Epilepsy, Fibro Mialgia and the other diseases that marijauna has been proven effective for. The tax income to the state could have been in the billions.
did the same thing when they raided the healthcare retirement fund to pay for the BPOL repeal. I'm glad to see that Senator Stuart thinks "It's bad fiscal policy,"
So many pensions are being picked up by the federal government that it has me wondering if that is the plan in Richmond. Let's not raise taxes to pay our liabilities and instead rely on the entire country to cover it. Great responsibility. Let's have all the states start doing that.
"Robbing Peter to pay Paul" seems to be fitting here. Sounds like it will just cause more trouble.
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