Employer Update

While 2022 Special Session I continues, several bills affecting VRS have been signed into law by the governor, including:

House Bill 473, Senate Bill 70

Separate Defined Benefit and Defined Contribution Employer Rates

The employer defined contribution amounts for the Hybrid Retirement Plan will no longer be combined with the board-certified defined benefit rate, effective July 1, 2024.

Currently, the blended monthly employer contribution rate consists of the VRS board-certified defined benefit rate and an estimate of an employer’s defined contribution plan matching contributions, based on employees’ voluntary contributions.

Once complete, the changes should reduce payroll reconciliation issues and other administrative burdens on employers. Benefits for members include a quicker investment of member contributions and the ability to make voluntary contribution changes monthly, rather than on the current quarterly schedule.

The delayed effective date of July 1, 2024, coincides with the normal biennial review of contribution rates. Delayed implementation will allow time for VRS to work with employers to make process changes. Separating the rates may require employers to modify payroll processes and will require changes to VRS processes as well. VRS will begin communicating with employers in the coming months.

Senate Bill 349

Gain/Loss Calculations for Approved Domestic Relations Orders

This legislation requires:

• VRS record keepers (currently MissionSquare Retirement and TIAA) to calculate gains and losses when a court divides a VRS-administered defined contribution account in a divorce through an approved domestic relations order.
• VRS to conduct a survey and submit a report to the General Assembly by October 1, 2022, regarding gain/loss calculation practices of other governmental retirement plans administered by Virginia public employers.

When the calculation is required by the court, the record keeper must recalculate the account history manually starting with the date in the court order. The recalculation must also account for any fund transfers or dividends paid.

Under the legislation, the gain/loss calculation would be required only to the extent that sufficient information exists to perform the calculation.

Senate Bill 468

Line of Duty Act (LODA) Medical Reviews Must Be Conducted by Virginia Practitioners or those from Neighboring States

Medical reviews of claims under the Line of Duty Act (LODA) must be performed by a doctor, nurse or psychologist who is licensed in Virginia, the District of Columbia or a state contiguous to Virginia, effective July 1, 2023.

Special Session: Biennium budget negotiations were carried over into a special session, which began April 4.

Employer contribution rates and other post-employment benefit contribution rates for the statewide plans in fiscal years 2023-24 are subject to the state budgeting process. However, employer contribution rates provided for non-professional school board and political subdivision plans, including the Virginia Local Disability Program (VLDP) and health insurance credit (HIC) for political subdivisions, are final with the certification by the board last fall.

VRS will publish its full 2022 Legislative Summary after the conclusion of the Special Session. Look for it on the Legislation webpage.