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Charlottesville Daily Progress
Sunday, August 2nd, 1998
Political Notebook
By Bob Gibson
Pension Proposal. The pension system used by the state and local employees should be modernized to give the workers more options, says the Earlysville man who chairs the Virginia Retirement System Board.
New state and local employees should be given a choice of a defined contribution retirement plan, according to Edwin T. Burton III.
The proposal would offer VRS participants a better pension than they could receive under the state’s current "defined benefit plan," Burton said.
He said VRS participants should be allowed to choose either the existing plan or a new defined contribution plan, which wold offer the advantage of portability if a workers does not spend an entire career in state or local government.
"Freedom of choice is a big issue here," said Burton. He said younger employees especially ought to have their retirement funds invested in higher-risk stock market plans instead of the state’s fixed benefit annuities.
Burton is trying to sell his proposal to various public employee groups and met with Virginia Education Association brass last week.
A teacher representative in Charlottesville said many teachers might object to a switch to a defined contribution plan but are less likely to oppose having the option.
Burton said the existing plan "would stay forever an option" if new employees or all employees are given a chance to switch to a portable defined contribution plan.
He said older employees might prefer to stay with the defined benefit plan that pays a set amount per month after retirement and is adjusted, at least partially, to inflation.
The University of Virginia commerce and economics instructor said the VRS now has 288,000 paying contributors, including 110,000 public school teachers, 90,000 municipal employees and 80,000 state employees.
Pensions & Investments, a trade journal, endorsed Burton’s proposal in a recent editorial urging state lawmakers to give it a try next year.
"The defined contribution plan would offer many VRS participants a better pension than they could get now," the trade journal said. "The proposal is not without its detractors. A state teachers’ representative reacted unfavorably, saying teachers may be too busy in their work to have the time to invest their funds in a defined contribution plan. Such a comment shows teachers and other state employees need more education about the proposal."
Burton is approaching state legislators to try to sell them on the proposal. So far, the reactions have been positive, he said.
Former governor George F. Allen, once Burton’s next-door neighbor in Earlysville is scheduled to moderate a panel in Chicago this month with Burton as a panelist to discuss public employee pension reform.
The conservative American Legislative Exchange Council invited Allen and Burton to discuss "public sector defined contribution plans and how they provide public employees with increased retirement savings" according to the group’s invitation.