In This Edition

1. 2010 VRS Bills Include Plan Design Changes
2. Voluntary Long-Term Care Coverage Available at No Cost to Employers
3. Employer Website, Newsletter Dedicated to Defined Contribution Plan Information
4. State Severance Benefit Reminders
5. Reminder: Follow Security Tips to Keep Employee Data Safe
6. Help Employees Save, Reduce Debt and Build Wealth
7. Your Turn to Ask

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2010 VRS Bills Include Plan Design Changes

The 2010 General Assembly session convened Jan. 13. There are more than 30 VRS-related bills currently under consideration.

Several bills propose plan design changes similar to the changes recommended in Governor Kaine’s budget. The bill gaining most attention is HB 1189 introduced by Delegate Putney, Chairman of the House Appropriations Committee. HB 1189 would modify all VRS defined benefit retirement programs for members hired on or after July 1, 2010 to:

• Require employees to contribute 5 percent of creditable compensation to their member contribution accounts;
• Cap the COLA formula at a maximum of 4 percent;
• Establish the member’s average final compensation at the highest consecutive 60 months of compensation;
• Set age and service eligibility for unreduced benefits using the “rule of 90” (age and service equal 90); and
• Reduce the retirement multiplier to 1.65 percent of average final compensation.

Together, these changes would establish a new tier of benefits for VRS members hired on or after July 1, 2010. The bill also would decrease the Commonwealth’s contribution for employees of certain optional retirement plans by 1 percent of creditable compensation.

Any changes to the VRS benefit structure must be approved by the House and Senate and be signed by the Governor. HB 1189, like other measures before the General Assembly, will be subject to amendments. The full impact of any VRS legislation will not be known until the conclusion of the session this spring. Bills enacted by the General Assembly and Governor usually take effect July 1. Track the status of VRS-related bills.

Voluntary Long-Term Care Coverage Available at No Cost to Employers

If you don’t offer the Commonwealth of Virginia Voluntary Group Long Term Care Insurance Program for your employees, now is a great time to consider adding it to your benefits package.

The program, which is administered by Genworth Life, is open to employees who work at least 20 hours a week for a participating employer, as well as vested deferred members and retirees. Participants also can include their spouses, parents, parents-in-law, step parents, step parents-in-law, grandparents, grandparents-in-law, step grandparents, step grandparents-in-law and adult children who are between ages 18 and 79.

Long Term Care Program Features

• As an employee-paid program, there is no cost to you to offer it. Employees can pay the premiums through payroll deduction or directly to Genworth Life.
• It may help minimize costs due to absenteeism, productivity loss and replacement costs for employees who quit or reduce their hours in order to provide care for a family member.
• Participants who are eligible for long-term care coverage under the Virginia Sickness and Disability Program (VSDP) or have other long-term care coverage can coordinate with the voluntary program to obtain even more coverage.
• New employees who enroll in the program within 60 days of employment do not have to provide proof of good health.
• Participants can choose from three benefit increase options that will allow an increase in coverage over time to help protect against the rising cost of care.
• Coverage provides monthly benefit amount allowances as opposed to daily allowances. Monthly allowances provide more flexibility and coverage when paying for certain services.
• It’s portable, meaning employees can take it with them if they leave their job.

Initial Enrollment Period

Between March 22 and April 30, employees can enroll in the Commonwealth of Virginia Voluntary Group Long Term Care Insurance Program without having to provide proof of good health (evidence of insurability) for themselves and only limited proof for spouses. State employees, college and university faculty and employees of participating political subdivisions and school boards will receive enrollment information at their home addresses.

Employees who were covered under the former long-term care program with Aetna but transferred coverage to Genworth also will receive information in the mail at their home regarding the new plan features. They will be eligible to modify their current coverage or add other features.

For more information about participating in the plan, contact Cathi Ames at GLTCInfor@genworth.com. For more information about the plan, visit www.genworth.com/vrs.

Employer Website, Newsletter Dedicated to Defined Contribution Plan Information

Information about the Commonwealth of Virginia 457 Deferred Compensation and Virginia Cash Match Plans, Optional Retirement Plans and the Virginia Supplemental Retirement Plan is available on the VRS website at Resource Center for VRS Employers. Resources include:

• Contact information for ING regional representatives
• Schedule for regional meetings on the 457 Plan
• Employer publications and guides, along with ordering information
• Investment option information such as performance and fund profile sheets
• Employer Webinar registration and archives
• FAQ's
• Plan forms

Subscribe to the DC Plans Employer Update to receive the latest news and information about the defined contribution plans. Be sure to include “subscribe” in the subject line and your e-mail address in the body of your message. Read the latest edition.

Looking for ways to help your employees understand the plans? Give your regional representative a call to schedule an on-site visit convenient to you and your employees. No matter the size of your employee group, representatives will meet with your group or individual employees. For more information, call toll free 1-VRS-DC-PLAN1 (1-877-327-5261). Select Option 2 from the main menu to reach the Virginia Service Center. Please call 30 to 60 days in advance of when you would like an ING representative to come to your location.

State Severance Benefit Reminders

With the Governor's announcement in December regarding additional layoffs in response to the continued impact of the economic downturn, more employees will be seeking assistance with their benefits under the Workforce Transition Act (WTA). Here are some reminders if you are working with state employees who are eligible to retire under WTA:

• As a result of language added to the 2009 Appropriations Act, required payments by state agencies for WTA service credit have been suspended for employees whose termination date is on or before June 30, 2010.
  
  
• The Employer Certification of Involuntary Separation Under the Workforce Transition Act (VRS-11) 34kb provides a retirement credit worksheet for determining the additional years of service credit for which an employee may qualify. In lieu of the VRS-11, VRS will accept a printed DHRM calculation worksheet from the WTA calculator available on the Department of Human Resource website. The DHRM worksheet must include the employer signature, date and phone number. You must certify the additional service credit on the VRS-11 or worksheet.
  
  
• Remind your employees to submit the Application for Service Retirement (VRS-5) 125kb to you, not to VRS. The application requires your certification before VRS can process it. Include the VRS-11 and the signed, dated DHRM worksheet, if applicable, with the application when you submit it to VRS.
  
  
• If you are authorized to access myVRS for Employers, you can estimate the benefit for employees eligible to retire under WTA. The estimate is based on the same member information VRS uses to estimate benefits. Remember that the member must be at least age 50 and vested to qualify for retirement under WTA. If the employee is not yet age 50, choose a retirement date after the member’s 50th birthday. If the member is 50 on the first of the month, that month can be used. VRS member counselors also are happy to assist your employees, provided the counselors have your estimate of their additional WTA service credit from the VRS-11 or the DHRM WTA calculator.

WTA Resources

• An employer WTA job aid and checklist are available at Checklists & Job Aids.
• An online tutorial explaining the VRS-11 is available at Employer Training.
• More information about WTA retirement eligibility requirements is available at Severance Benefits (State Employees).

Reminder: Follow Security Tips to Keep Employee Data Safe

To reduce the risk of losing valuable member records, VRS will no longer accept unencrypted disks that contain sensitive information such as Social Security numbers or other confidential information. Employers must use the VRS WebER application. WebER allows for a secure electronic transfer of payroll files. Coming in 2011, VRS’ Modernization Program will provide even more ways to communicate sensitive information securely.

Here are additional tips for keeping VRS customer data secure:

• Never use e-mail to send sensitive information regarding individual employees to VRS. VRS will send only non-confidential replies. For assistance, call VRS toll free at 1-888-VARETIR (1-888-827-3847) to speak with an Employer Advisor (select menu option 3) or contact your Employer Representative.
• Encrypt files containing sensitive employee information before e-mailing them to VRS.
• Never copy sensitive information to storage media or devices such as flash or “thumb” drives, diskettes or CDs.
• Use an industry-accepted standard for the encryption algorithm such as AES. Many encryption packages will support this algorithm such as WinZip, MS Office 2007 or PGP software. Earlier versions of MS Office have a weak encryption algorithm that is easy to break. Your local IT support representative should be able to assist you with your encryption options.

Help Employees Save, Reduce Debt and Build Wealth

America Saves Week is a great time to remind employees of the need to save, reduce debt and build wealth for a secure retirement. Remind them of the opportunities and educational resources available to VRS members:

• Encourage them to register for myVRS to get information about their estimated retirement benefits and other member information.
• Encourage them to use the myVRS Retirement Planner to get an idea of their income and expenses when they retire. They can use this information to estimate how much additional money they might need to save to reach their retirement goals.
• Encourage participation in the Commonwealth of Virginia’s 457 Deferred Compensation Plan and the 403(b) plan, if eligible. Through these plans, employees can build tax-deferred savings quickly and conveniently through payroll deduction. If they already participate in a savings plan, encourage them to consider increasing the amount they are contributing.
• Remind them of resources available from VRS including free retirement education seminars and group counseling sessions.
• Advise them to read the Member News, Pre-retirement Planning Guide, Handbook for Members and other publications to stay informed about their VRS benefits and changes to them.

The fourth annual America Saves Week is February 21 – 28. Find out more at the America Saves website.