Northam to spend $100 million to reduce teacher retirement liabilities – Richmond.com

Posted: December 16, 2020 at 12:56 am


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Northam will propose to pay off the debt at the end of the current fiscal year on June 30. He also will propose to reduce the liabilities for other post-employee benefits, such as retiree health credits, which are currently underfunded and require higher ongoing contributions by state and local governments.

The lower we can push down these liabilities, the better it is for everybody, Layne said.

VRS officials say the payment will not affect employer rates in the current two-year budget, but will result in lower costs in the next budget.

The extra money coming in will essentially moderate future rates, said Rory Badura, senior staff actuary for the retirement system.

The proposed payments also would partly offset the higher rates that the state and local governments already have begun to pay since the VRS decided last year to lower its expected long-term annual return on investments from 7% to 6.75% a year.

The decision reflected diminished expectations for investment income that pays for most of the retirement costs for almost 750,000 active, retired or inactive employees in the $85 billion system.

The lower the investment income, the higher the contributions that state and local governments must pay in their annual budgets. The lower investment return is estimated to cost $216 million a year in contributions from public employers, including about $94 million a year from the state general fund budget, which relies on state taxes to pay for core government services.

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Northam to spend $100 million to reduce teacher retirement liabilities - Richmond.com

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December 16th, 2020 at 12:56 am

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