Plan 1 State Employees Now Pay 5% Contribution
Effective June 25, 2011, state employees in VRS Plan 1 received a 5 percent salary increase and began paying the 5 percent member contribution on a pre-tax salary reduction basis. This change is in the 2011 Appropriations Act passed during the recent General Assembly session. Employees will see the changes reflected in their July 15 pay record.
The provision excludes Plan 1 state elected officials and judges, ORP participants, VRS Plan 2 members and wage employees. It also excludes Plan 1 and Plan 2 employees in local government positions reimbursed by the Compensation Board (these positions include constitutional officers such as treasurers, commissioners of revenue, commonwealth attorneys and sheriffs).
The 5 percent salary increase will have the following impact on Plan 1 state employees' VRS benefits:
- Creditable compensation will increase, which will increase employees' future retirement benefit calculations;
- Basic and optional group life insurance benefit amounts will increase with the salary increase, and optional group life insurance premiums will increase in January;
- In the event that your employees need short-term or long-term disability under the Virginia Sickness and Disability Program, the income replacement amount will increase; and
- The cost to purchase prior service will increase since the cost is based on compensation or average final compensation (AFC), whichever is higher.
State employees who use Payline will see an additional deduction box in their pay record labeled "VRS Retirement." The labeling of this deduction may vary among non-CIPPS reporting employers and on printed checks. Check with your payroll office for details.
For more information, see the Department of Human Resource Management (DHRM) Frequently Asked Questions.