Skip to main content
MENU
Subscribe
  • Subscribe
  • Account
  • LOGIN
  • Topics
    • Alternatives
    • Consultants
    • Coronavirus
    • Courts
    • Defined Contribution
    • ESG
    • ETFs
    • Hedge Funds
    • Industry Voices
    • Investing
    • Money Management
    • Opinion
    • Partner Content
    • Pension Funds
    • Private Equity
    • Real Estate
    • Russia-Ukraine War
    • SECURE Act 2.0
    • Special Reports
    • White Papers
  • Rankings & Awards
    • 1,000 Largest Retirement Plans
    • Top-Performing Managers
    • Largest Money Managers
    • DC Money Managers
    • DC Record Keepers
    • Largest Hedge Fund Managers
    • World's Largest Retirement Funds
    • Best Places to Work in Money Management
    • Excellence & Innovation Awards
    • WPS Innovation Awards
    • Eddy Awards
  • ETFs
    • Latest ETF News
    • Fund Screener
    • Education Center
    • Equities
    • Fixed Income
    • Commodities
    • Actively Managed
    • Alternatives
    • ESG Rated
  • ESG
    • Latest ESG News
    • The Institutional Investor’s Guide to ESG Investing
    • ESG Sustainability - Gaining Momentum
    • Climate Change: The Inescapable Opportunity
    • Impact Investing
    • 2022 ESG Investing Conference
    • ESG Rated ETFs
  • Defined Contribution
    • Latest DC News
    • DC Money Manager Rankings
    • DC Record Keeper Rankings
    • Innovations in DC
    • Trends in DC: Focus on Retirement Income
    • 2022 Defined Contribution East Conference
    • 2022 DC Investment Lineup Conference
  • Searches & Hires
    • Latest Searches & Hires News
    • Searches & Hires Database
    • RFPs
  • Performance Data
    • P&I Research Center
    • Earnings Tracker
    • Endowment Returns Tracker
    • Corporate Pension Contribution Tracker
    • Pension Fund Returns Tracker
    • Pension Risk Transfer Database
    • Future of Investments Research Series
    • Charts & Infographics
    • Polls
  • Careers
  • Events
    • View All Conferences
    • View All Webinars
    • 2022 Retirement Income Conference
    • 2022 Managing Pension Risk & Liabilities
    • 2022 WorldPensionSummit
Breadcrumb
  1. Home
  2. Print
June 29, 1998 01:00 AM

VIRGINIA TO CONSIDER CREATING A DC PLAN

Vineeta Anand
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print

    RICHMOND, Va. -- The chairman of the $31.5 billion Virginia Retirement System is pressing state lawmakers to create an optional defined contribution plan for new employees, and Republican Gov. Jim Gilmore's administration seems receptive to the idea.

    This is the second time VRS Chairman Edwin T. Burton III has asked legislators to approve a 401(k)-like plan. The system covers 356,000 workers and retirees.

    The first time, in the mid-1990s, the administration of then-Gov. George Allen decided against doing anything more than informally studying the idea.

    This time -- despite fierce opposition from some VRS trustees and state lawmakers -- Mr. Burton might succeed.

    For one thing, Mr. Burton says his proposal is designed to empower workers.

    "Employees who do not stay until retirement do not get a good deal," he said.

    State workers who quit their jobs and move outside the state or to the private sector receive only 4% interest on their contributions if they take lump sum distributions. They do not receive any of the state's contribution.

    Alternatively, they can leave their money with VRS and receive retirement benefits based on their salary and the number of years they worked for the state government.

    "It's not an attractive choice," Mr. Burton said.

    The state contributes about $255 million to the VRS, which is 79.8% funded.

    Ronald L. Tillett, Virginia's secretary of finance, said the Gilmore administration is studying Mr. Burton's proposal.

    It is "highly possible" that lawmakers might agree by the end of the current legislative session to commission a study of Mr. Burton's proposal, Mr. Tillett said.

    "There is always a catalyst for change and Ed Burton, as chairman of the retirement system . . . might be the catalyst for change," he said.

    The Gilmore administration is interested in examining proposals that would make the state retirement system "better, more flexible, more portable for hardworking employees of Virginia," he said. But any proposal drafted, he said, would have to have input from state employees and employers, and would need the backing of lawmakers and the executive branch.

    The state wet its feet last year by approving a small defined contribution plan for around 70 key cabinet officials and school superintendents.

    Under last year's law, the state's top officials may either stay in the current defined benefit pension plan, or opt for the new defined contribution plan, which kicked off July 1. State officials who opt for the new defined contribution plan would receive an employer contribution of 10.04% and still be able to switch back to the traditional pension plan after they are fully vested in five years. The Virginia Retirement System will administer the new defined contribution plan; participants will be able to choose from eight investment options.

    The state currently contributes 9.41% of pay for state employees covered by the traditional pension plan. What's more, Virginia college professors have participated in a defined contribution retirement plan for decades, said William H. Leighty, VRS' executive director, who declined to comment on Mr. Burton's proposal.

    VRS' board of trustees has not taken a formal position on its chairman's proposal, Mr. Leighty said.

    VRS Chief Investment Officer Erwin H. Will Jr. says he supports Mr. Burton's proposal.

    Some VRS trustees and state lawmakers are not shy about criticizing Mr. Burton's proposal.

    State teachers groups are expected to register their opposition.

    Elise Emanuel, who has represented state teachers on the VRS board since 1994, is concerned about how teachers would fare.

    "The teachers I know and represent are very busy teaching school. That is why it's difficult to have so much time to spend on investments," she said.

    She also worries that in the long term a new defined contribution plan could eviscerate VRS by drawing new teachers away from the defined benefit plan.

    The Virginia Education Association, which represents about 100,000 state teachers and instructors, intends to study Mr. Burton's proposal, but will probably oppose it, said Ralph J. Shotwell, director of finance, research, retirement and special services.

    Recommended for You
    Read the print edition of P&I
    Read the print edition of P&I
    How low is low? Projections say it's not low enough
    How low is low? Projections say it's not low enough
    FINRA honors Wharton's Olivia Mitchell with Ketchum Prize
    FINRA honors Wharton's Olivia Mitchell with Ketchum Prize
    Private Markets
    Sponsored Content: Private Markets

    Reader Poll

    August 10, 2022
    SEE MORE POLLS >
    Sponsored
    White Papers
    Gaining Momentum: Where Next for Trend-Following?
    The market opportunity in U.S. residential mortgage-backed securities
    Credit Indices Evolve with Enhanced Data Inputs
    Hedge Funds 2.0: Back to the future
    How Has 2022's Carnage Reshaped Global Stock and Bond Markets?
    Crossroads: Politics, Inflation, & Bonds
    View More
    Sponsored Content
    Partner Content
    The Industrialization of ESG Investment
    For institutional investors, ETFs can make meeting liquidity needs easier
    Gold: the most effective commodity investment
    2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios
    Ten ways retirement plan professionals add value to plan sponsors
    Gold: an efficient hedge
    View More
    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today
    August 1, 2022 page one

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    130 E. Randolph St.
    Suite 3200
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Content Solutions
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    • Privacy Request
    Pensions & Investments
    Copyright © 1996-2022. Crain Communications, Inc. All Rights Reserved.
    • Topics
      • Alternatives
      • Consultants
      • Coronavirus
      • Courts
      • Defined Contribution
      • ESG
      • ETFs
      • Hedge Funds
      • Industry Voices
      • Investing
      • Money Management
      • Opinion
      • Partner Content
      • Pension Funds
      • Private Equity
      • Real Estate
      • Russia-Ukraine War
      • SECURE Act 2.0
      • Special Reports
      • White Papers
    • Rankings & Awards
      • 1,000 Largest Retirement Plans
      • Top-Performing Managers
      • Largest Money Managers
      • DC Money Managers
      • DC Record Keepers
      • Largest Hedge Fund Managers
      • World's Largest Retirement Funds
      • Best Places to Work in Money Management
      • Excellence & Innovation Awards
      • WPS Innovation Awards
      • Eddy Awards
    • ETFs
      • Latest ETF News
      • Fund Screener
      • Education Center
      • Equities
      • Fixed Income
      • Commodities
      • Actively Managed
      • Alternatives
      • ESG Rated
    • ESG
      • Latest ESG News
      • The Institutional Investor’s Guide to ESG Investing
      • ESG Sustainability - Gaining Momentum
      • Climate Change: The Inescapable Opportunity
      • Impact Investing
      • 2022 ESG Investing Conference
      • ESG Rated ETFs
    • Defined Contribution
      • Latest DC News
      • DC Money Manager Rankings
      • DC Record Keeper Rankings
      • Innovations in DC
      • Trends in DC: Focus on Retirement Income
      • 2022 Defined Contribution East Conference
      • 2022 DC Investment Lineup Conference
    • Searches & Hires
      • Latest Searches & Hires News
      • Searches & Hires Database
      • RFPs
    • Performance Data
      • P&I Research Center
      • Earnings Tracker
      • Endowment Returns Tracker
      • Corporate Pension Contribution Tracker
      • Pension Fund Returns Tracker
      • Pension Risk Transfer Database
      • Future of Investments Research Series
      • Charts & Infographics
      • Polls
    • Careers
    • Events
      • View All Conferences
      • View All Webinars
      • 2022 Retirement Income Conference
      • 2022 Managing Pension Risk & Liabilities
      • 2022 WorldPensionSummit