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Employer Update Archives | April 2011 A Publication for VRS Employers

House Bill 1794 - Collection of Overpayments

Under certain conditions, VRS may collect member or beneficiary benefit overpayments from the employer. These situations include overpayments resulting from:

  • A retiree granted a salary increase by the employer that is not related to a promotion and the primary purpose is to increase the retiree's benefit;
  • An employer hiring a retiree in a non-covered position without complying with the provisions that govern the bona fide break in service and other return-to-work requirements; or
  • An employer hiring a retiree in a covered position while the employee continues to receive a retirement benefit.

House Bill 1795 - Technical Corrections for Plan 2 Members

info This summary reflects the enrolled version of the bill passed by the General Assembly. At the time of publication, the bill had not been signed by the governor.

Provisions of various Virginia Code sections have been updated to recognize the difference in certain benefits for Plan 2 members:

  • Plan 2 state employees must be at least age 60 to qualify for retirement under the Workforce Transition Act (WTA).
  • An employee who is approved for disability benefits on or after the date that is five years prior to his or her normal retirement date is eligible for five years of disability benefits.
  • Certain state employees and county, city and town employees covered under VRS who have 20 or more years of service credit may be eligible to retire with an unreduced benefit at age 50 if they are in Plan 1 or age 60 if they are in Plan 2 if they are involuntarily separated from employment.
  • Plan 2 death-in-service benefit calculations for non-hazardous duty employees will assume age 60.
  • Optional group life insurance coverage for Plan 2 disability and service retirees and their dependents will continue until their normal retirement age under their plan if they do not convert their coverage to an individual policy upon retirement.

HB 1795 also allows members covered under the Virginia Sickness and Disability Program (VSDP) to purchase prior service credit for periods on short-term work-related disability when the 5 percent employee contribution was not made because the employee was receiving workers' compensation benefits and not the VSDP benefit. The purchase rate is 5 percent of creditable compensation.

House Bill 2095 - Loss of Benefits for Certain Felony Convictions

Upon notification by the employer to VRS, members who are convicted of a felony associated with the performance of their job duties on or after July 1, 2011 will forfeit their eligibility for retirement, life insurance, VSDP and VSDP long-term care benefits. If these members are convicted after they begin receiving benefits, their benefits will stop.

These members will be eligible for a full or partial refund of their member contributions and interest based on whether or not they are vested, as provided under legislation effective last July 1. If the person returns to a covered position at a later date, the service lost as a result of the felony action cannot be purchased.

House Bill 2096 - Benefits for Constitutional Officers

Constitutional officers with at least 20 years of service credit whose positions are abolished may retire with an unreduced benefit at age 50 if elected to office before July 1, 2010 or age 60 if elected on or after July 1, 2010.

VRS State Budget Provisions

Plan 1 Member Contributions

State employees in the VRS Plan 1 defined benefit program will receive a 5 percent raise and begin paying the 5 percent member contribution effective July 1 on a pre-tax salary reduction basis. This provision excludes state elected officials, judges, ORP participants and Plan 2 state employees. It also excludes local government positions reimbursed by the Compensation Board. Local governments and school boards that currently pay the member contribution for VRS Plan 1 members will continue to do so. However, they can require Plan 2 members to pay their member contributions by submitting a resolution to VRS by July 1, 2011. More information about the resolution process will be published in the May issue of Employer Update.

State Employer Contribution Payments

State agencies will submit payments to VRS on a monthly instead of quarterly basis in order to invest state funds sooner and potentially yield higher investment gains on state agency contributions.

Line of Duty Act Fund

The deadline for localities to elect to participate in the Line of Duty Act (LODA) Fund or self-fund their employees' LODA benefits has been extended to July 1, 2012. In addition, the state comptroller may advance Line of Duty death benefits to pay funeral expenses when a death is likely to be covered under the program. In the event that a subsequent investigation determines that the death was not covered, VRS can deduct the previously paid funeral expenses from any other benefits owed to a member's beneficiaries.

Cash Match Increase for DC Plan Participants

Effective with the July 1, 2011 pay date, the cash match for salaried state employees who participate in the 457 Deferred Compensation Plan and the 403 (b) plan will return to 50 percent of their contribution, not to exceed $20 per pay period. The cash match was reduced to $10 per pay period for the current fiscal year, which ends June 30, 2011.

Employer Contribution Rate Increases

Employer contribution rates for VRS (general state employees only), SPORS, VaLORS and JRS, to be effective for FY 2012, are as follows:

Employer Contribution Rates FY 2012
  June 25, 2011 to
March 24, 2012		 March 25, 2012 to
June 24, 2012
Retirement1
State - VRS 2.08% 6.58%
SPORS 7.73% 21.16%
VaLORS 5.07% 13.09%
JRS 28.65% 42.58%
Teacher - VRS2 6.33% 6.33%
Political Subdivisions - VRS2 No Change
Varies by locality		 No Change
Varies by locality
Group Life Insurance
State No Change
Remains at 0.28%		 No Change
Remains at 0.28%
Teacher2 No Change
Remains at 0.28%		 No Change
Remains at 0.28%
Political Subdivisions2 No Change
Remains at 0.28%		 No Change
Remains at 0.28%
Health Insurance Credit
State No Change
Remains at 0.10%		 No Change
Remains at 0.10%
Teacher2 No Change
Remains at 0.60%		 No Change
Remains at 0.60%
Political Subdivisions2 No change
Varies by locality		 No change
Varies by locality
VSDP
  No change
Remains at 0.00%		 No change
Remains at 0.00%
  1. Retirement contribution rates do not include the 5 percent member contribution.
  2. Teacher and political subdivision rates are effective for the entire months of July 2011 through June 2012.

JLARC Study on Employee Retirement Programs Proposed

While the proposed defined contribution plan option for new employees did not pass during this session, the Joint Legislative Audit and Review Commission (JLARC) has been asked to undertake a review of Virginia's employee retirement programs. If approved, the study will be available for consideration during the 2012 session of the General Assembly.

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