Virginia Gov. Bob McDonnell is proposing that all Virginia employees pay into the state’s retirement system starting in July 2011 – the first time employees would be required to do so since 1983.
The state’s Joint Legislative Audit and Review Commission (JLARC) this week said that the combined unfunded liability of state-supported retirement plans total $17.6 billion. McDonnell said on a conference call that he was determined not to pass the problem onto future governors.
“Investment returns, even in the strongest of bull markets, cannot be expected to close a gap of this magnitude,” he said. “Our retirement system needs additional funding, and that is what we are going to provide.”
Employees would receive a commensurate 3 percent pay increase and the changes would provide an additional $300 million to the retirement system in fiscal 2012.
The total market value of the fund was $50.8 billion as of Sept. 30 – a $3.9 billion increase since last year – but the rate of return would have to be 44 percent for rates to remain where they are, according to JLARC.
