West Virginia educators dropping 401K, returning to defined benefit state pension

From John Curry, May 8, 2008
Subject: WV educators want to drop their 401K and go back to a defined benefit state pension!

"Tons of transfer forms are coming in today," Anne Lambright, executive director of the state Consolidated Public Retirement Board, said Wednesday. "We are just being swamped. We are overwhelmed, and so are our accountants."

Charleston Daily Mail
May 8, 2008

Response picks up in teacher pension switch

State officials say they've received many notices in the past day from teachers and school personnel who want to switch from a 401(k)-style investment plan to the Teachers Retirement System.

"Tons of transfer forms are coming in today," Anne Lambright, executive director of the state Consolidated Public Retirement Board, said Wednesday. "We are just being swamped. We are overwhelmed, and so are our accountants."

That comes as good news to backers of a plan to give the nearly 19,000 participants in the Teachers' Defined Contribution plan the opportunity to switch to TRS pensions - but only if at least 65 percent, or 12,343 people, elect to transfer.

Just last week, executives with the West Virginia Federation of Teachers and the West Virginia School Service Personnel Association sent a letter to Gov. Joe Manchin asking for an extension of the May 12 deadline to submit the transfer forms. They feared the transfer election was in serious trouble.

At that point, only about 1,500 transfer forms had been received by the retirement board, an 8 percent participation rate.

"There's been a lot of activity in the last couple days, as best I can tell, in the schools," said Bob Brown, executive secretary with the WVSSPA. "At this point, it appears we're in position to make the 65 percent threshold."

Likewise, David Haney, executive director of the West Virginia Education Association, said he's aware of a flurry of activity in the past couple of days.

"I'm pretty optimistic about it," he said Wednesday. "I believe we'll get to 65 percent, and I think there's a real chance to get past 75 percent."

The 75 percent threshold is important for TDC participants who wish to buy in for a full pension under TRS. Once the 75 percent margin is passed, the formula for the buy-in drops considerably, dropping the cost from tens of thousands of dollars to thousands of dollars in many cases.

Participants who switch to TRS but do not take the buy-in option will be eligible for a pension equal to 75 percent of the normal TRS rate.

"I think participation has picked up substantially, based on the schools we've been going to and our staff has been going to," said Judy Hale, president of the West Virginia Federation of Teachers.

"This is their opportunity to retire with dignity," Hale said of the TDC participants, the vast majority of whom have critically underfunded retirement accounts.

"I certainly hope we can reach the threshold," she said.

One reason for optimism is it appears that many principals and department supervisors have collected transfer forms from their employees since early April, but waited until this week to mail them to Charleston, Lambright said.

"We've had some schools that collected 100 percent, and they all came in at one time," she said. "The individual forms are mixed in terms of dates."

Other than setting a May 13 deadline for principals and supervisors to mail the collected transfer forms to Charleston, the TDC/TRS legislation did not require principals to periodically submit forms.

"I think human behavior is to wait until the end," Lambright said.