The West Virginia Consolidated Public Retirement Board serves the following classes:
- Public Employees (Public Employees’ Retirement System).
- Teachers (Teachers’ Retirement System).
- Judges (Judges’ Retirement System).
- Deputy Sheriffs (Deputy Sheriffs’ Retirement System).
- Troopers (West Virginia State Police Retirement System).
- Emergency Medical Services (Emergency Medical Services Retirement System).
- Municipal Police Officers (MPFRS)
- Firefighters (Municipal Police & Firefighters; Retirement System)
The largest group is the Public Employees’ Retirement System (PERS) that looks after the pension benefits for the State employees and that of its political subdivisions.
Management of the System
The Consolidated Public Retirement Board and its Board of Trustees governs the PERS and its funds. The Board includes the Governor, the State Auditor, the State Treasurer and the Cabinet Secretary for the Administration Department. The fund was created on 1st July 1961. The projected contributions are reviewed on an annual basis to make sure that they combine to present an actuarially strong funding for the scheme.
Features of the PERS
Public Employees’ Retirement System is doubly funded by both the employee as well as the employer contributions. An employee has to contribute 4.5% of the monthly salary to the pension plan. The employer contribution is 14.0% of the monthly salary of the employee. The contributions made by the employee are on tax deferred basis.
The employee can take retirement at age 55 with 25 years of earned credit service as per the Rule of 80. The employee’s age and the earned credit service have to equal 80. The employee can normally retire at age 60 with five or more years of earned credit service. The employee can also take an early retirement with a reduced benefit at age 55 with 10 or more years of earned credit service. An employee becomes vested after completing five years and earning sixty months of credit service.
An employee who is currently not employed actively with the public service and has not withdrawn any contributions previously can take retirement at age 62 with entire benefits if there is an earned credit service of five or more years.
Receipt and Calculation of Benefits
The pension benefits are not given automatically to the employee. A prospective retiree has to make out an application to the Pension Board to start taking the retirement benefits. Disbursement can begin by 1st April of the following year when the employee takes retirement or finally at the date when the employee turns seventy years and six months of age.
The regular pension benefits are paid out in equal installments every month. The calculation is done by taking the product of the employee’s credited service years and the final average compensation and multiplying it by 2%. The final average compensation is computed by taking the highest three-year pay period within the final fifteen years of the employee’s service.
Pension Annuity Options
A lifetime pension annuity is due to the employee on retirement with full benefits. Under this option, beneficiary benefits cannot be paid out. This is known as Straight Life Annuity.
The next option is 100% Joint & Survivor – An annuity is paid out every month on reduced basis to the employee throughout life. On the death of the employee, the designated beneficiary will get the same benefit for life.
50% Joint & Survivor – An annuity is paid out every month to the employee on reduced basis throughout life. On the death of the employee, the designated beneficiary will get half of the monthly benefit throughout life. The beneficiaries have to be necessarily a spouse, parents or children who are dependent. The contributions in this option are paid out with 4% interest.
Te first pension benefit is mailed out to the employee or the beneficiary directly to the specified address. The subsequent payments are directly credited to the employee’s designated bank account on the twenty fifth of every month. In the last month of the year, that is December, the benefit is credited on the eighteenth of the month.
Employees who have unused leave to their credit can redeem in lieu of extra credit service. The calculation is done on the basis of one month of service for every ten days of unused leave.
Employee can opt for disability retirement if the disability is due to service related injury. There is no requirement of minimum earned service in this situation. If the disability is not related to service or work, the employee should have ten or more years of earned credit service to qualify for disability retirement. The total disability benefits cannot be less than 50% of the employee’s final average compensation. The employee has to submit medical certificates in order to receive disability benefits.
The employee can designate primary and contingent beneficiaries prior to retirement. In case the situation changes, the beneficiary designation could be evaluated again or changed.
- Category 1 – If the employee has less than ten years of earned credit service, he or she can elect a beneficiary to receive the lump sum pension payment with an additional 4% interest.
- Category 2 – If the employee has more than ten years of earned credit service and has been hired before 9th June 2006, a 100% Joint & Survivor annuity is made eligible on death to the surviving spouse.
The West Virginia Public Employees’ Retirement System has 36,254 members. It has 22,793 retirees. The level of funding is at 58%. The assets equal eleven billion dollars. 561 million dollars have been paid out in benefits last year.
Cost of Living Adjustment (COLA)
A Bill had amended the West Virginian Code by adding a section, S18-7A-26V which is related to the cost of living adjustments that have to be offered to the public employees. This mandate was to provide a sum of $1,000 as COLA for payment by 30th June 2011. The cost of living adjustments for the period 2013-14 have been set officially at 1.7%.
The Pension Fund of West Virginia Investment Management Board has invested forty million dollars with Elementum NatCat Offshore Fund. This is being done as an allocation to a hedge fund. The pool for hedge funds was 1.34 billion dollars as of 31st May this year. This fund specializes in reinsurance investments that are Force Majeure or catastrophe linked. (Source: www.insidermonkey.com/blog/hedge-fund-news).