Employer Update

A new fiscal year brings new legislation, changes in retiree COLAs and important updates to VRS resources and websites.

Scan this list of what’s new in FY 2024:

Rules Change for Hiring Retirees in Certain School Positions

New legislation reduces the break-in-service requirements from 12 months to six months for retirees returning to work for public school divisions full-time in critical shortage and retiree school security officer positions. The retirees continue to draw their monthly retirement benefits while working in these jobs.

The Virginia Department of Education sets critical shortage positions for public schools every year. Employers can also designate certain positions if they meet the criteria. Eligible retirees can return to work full-time as teachers, bus drivers or other administrative/instruction personnel following a six-month break in service.

Legislators this year added a specialized student support critical shortage position, which includes school social workers, school psychologists, school nurses, licensed behavior analysts, licensed assistant behavior analysts, and other licensed health and behavioral positions, such as speech-language pathologists, as set by the Department of Education.

In addition, beginning July 1, 2023, the new legislation requires school boards to pay employer contributions for all critical shortage positions. Employer contributions are already required for retiree school security officer positions. No member contributions or other post-retirement employment benefit contributions (like group life insurance or the health insurance credit) will be billed. The employer contribution for these positions will be billed in the monthly snapshot.

Each year employers hire retirees into these positions, the retiree and the employer must sign and date the appropriate eligibility form and submit it to VRS. The forms were updated July 1, so please make sure you are using the correct form for the upcoming 2023-2024 school year. The VRS-160 forms are available on the VRS employer website.

Because these positions are for one school year only, critical shortage positions and retiree school security officers must be separated manually at the end of the year by June 30. These positions cannot be enrolled or separated by batch file. Please make sure your Security Administrator has assigned someone the Person Account Processor role to enter manual enrollments and separations. If you need assistance, contact your Employer Relationship Manager.

Updates to Handbooks and Websites

VRS made several updates to member handbooks and websites, as is typical for July 1. If you have printed handbooks and guides on hand, they are out of date (except for the VRS Member Guide). Please recycle them and refer to the publications section of the VRS website for July 2023 editions. You may order printed copies of the VRS Member Guide, which is designed for new hires. Other handbooks and guides are available on the VRS website for employees to view or download.

Also, the Employer Manual now covers Refunds and Distributions in separate chapters, to provide additional clarity around these distinct services.

COLA Increases Take Effect for Eligible Retirees

The following cost-of-living adjustments (COLAs) take effect July 1 for eligible retirees in Plan 1, Plan 2 and the Hybrid Retirement Plan (defined benefit component).

• 5% for Plan 1
• 3% for Plan 2 and Hybrid Retirement Plan

Eligible retirees will see the COLA amount in their August 1 benefit payment.

The statutory COLA is based on the annual monthly average of the Consumer Price Index for all Urban Consumers (CPI-U), published by the U.S. Bureau of Labor Statistics and updated each July 1. The Code of Virginia caps the annual COLA at 3% for Plan 2 and hybrid plan members and at 5% for Plan 1 members.

COLAs for Other Benefits

Members of VSDP receiving long-term disability benefits for at least one year will receive an increase in their LTD benefit July 1 based on the calculated COLA for the year.

• 5% for Plan 1
• 3% for Plan 2 and Hybrid

Hazardous Duty and Life Insurance

The Hazardous Duty Supplement will increase from $14,664 to $16,884, beginning July 1 and paid monthly beginning August 1.

Retirees with at least 30 years of service get a minimum life insurance benefit that does not reduce below a certain amount, indexed using the Plan 2 COLA each year. The new minimum beginning July 1 is $9,254.

Optional Life Insurance Rates Decrease for Certain Ages

The VRS Optional Group Life Insurance Program will see an overall rate reduction of 5% effective July 1. Based on plan experience and actuarial projections, premium rates will reduce for four age brackets:

• Ages 45-49: Decreases from $0.14 to $0.12 per month per $1,000 of coverage.
• Ages 55-59: Decreases from $0.33 to $0.31 per month per $1,000 of coverage.
• Ages 60-64: Decreases from $0.59 to $0.54 per month per $1,000 of coverage.
• Ages 65-69: Decreases from $1.06 to $1.02 per month per $1,000 of coverage.

The rate reduction will require adjustments to your payroll withholding for optional group life policy holders in the affected age brackets. Questions? Contact NaTosha D. Palmer at Securian Financial toll-free, 800-441-2258.