Municipalities in Virginia may soon be given the option to mandate that all teachers and local employees contribute five percent of their pay to the state’s pension system.
New legislation may also require the state pension system to apply the same actuarial rates to to local pensions as they do for the state.
Interestingly, according to TimesDispatch.com, the Virginia state legislature would raise the estimated annual return on investments for municipal pensions to 8 percent from 7.5 percent. This would reduce local pension obligations on an annual basis.
However, assumptions do not necessarily materialize, and when they don’t, municipal unfunded obligations rise.
This proposal flies in the face of what other states like South Carolina and New Jersey have proposed. In those instances, the states have lowered stock market return projections, and also tied COLA increases to total funding percentages in the pensions.