Virginia Republican Gov. Bob McDonnell recently proposed that employees participating in the state’s retirement system start paying toward their pensions for the first time since 1983 to shore up the depleted fund. The governor conceded Monday, however, that even a 5 percent employee contribution may not be enough to cover the shortfall in the $50 billion system that serves about 489,000 active and retired employees.
“But it’ll make substantial progress towards doing that,” McDonnell said on Fox Business Network. “It might get us to 75 or 80 percent funded over the next decade or so, but not 100 percent. So we still have work to do, even with that, but it reverses the decline and gets us on a road [toward] solvency.”
State officials estimate that the state’s pension funds are short $17.6 billion.
State workers hired after July 1, 2010, already contribute 5 percent toward their retirement. The proposed change would require all other employees to pay that same rate, though that would be partially offset by 3 percent pay increases.
The state’s share would also increase 2 percent on July 1, 2011. Localities would have the option to require the same 5 percent contribution if it’s offset by a pay raise of at least 3 percent.
State employees have “not been supportive,” McDonnell acknowledged, “but [their opposition] has been rather muted because they understand we’re in trouble.”
