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Old 01-09-2018, 11:41 AM
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Mary Pat Campbell
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WEST VIRGINIA

https://www.wvgazettemail.com/news/p...124543df5.html
Quote:
State to save on pension premiums due to good investment returns
Spoiler:
West Virginia House and Senate Finance Committee members received a bit of good news Monday, two days before the start of the 2018 legislative session: Thanks to strong investment earnings and more employees in a new benefits tier, the state’s contribution to public employees and teachers’ pension funds will drop by $32.8 million next budget year.

Jeffrey Fleck, executive director of the state Consolidated Public Retirement Fund, told members of the interim Joint Committee on Finance, that the employer pension contributions will drop from 11 percent to 10 percent of employee salary.

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“The total expected savings to the state because of investment returns is $26,632,000,” Fleck said.

During the past year, pension investments managed by the state Investment Management Board earned a 15.8 percent rate of return, more than double the 7.5 percent annual growth required to keep the pension funds fully funded.

Additionally, Fleck said, a 2015 law that moved new hires into a new pension tier with a 6 percent employee contribution, instead of 4.5 percent, will reduce the state’s share of pension costs by $9.35 million, with about 6,000 employees — or about 17 percent of the total workforce — already in the new tier.

Fleck also addressed questions about long delays in processing claims for new retirees, with some public employees and teachers last year having to wait months for their first pension checks.

He blamed the combination of the CPRB’s switch to a new computer system in May and an unusually high number of teachers retiring in July for the delays.

“We are addressing it,” Fleck said. “The wait time now is much less than it was previously.”

He said the changeover produced a steep learning curve, not only for the retirement board, but for the more than 800 employer groups under the CPRB.

“There are times when more than 30 days might be a possibility, but not three or four months,” Fleck said of improvements in processing new pension claims.

Also during Monday’s meeting:

Public Employees Insurance Agency Executive Director Ted Cheatham said PEIA is an anomaly among health insurance plans in that its premiums are based on insurees’ salaries.

He said the legislation creating PEIA allows its Finance Board to consider ability to pay when setting premium schedules, a precedent established by the board years ago.

Cheatham said 2018-19 plan year changes approved by the Finance Board in December will mean slight premium decreases for single coverage and for employee and children coverage.


“There are quite a lot of single heads of family, and we’re trying to help them,” he said.

Family coverage and employee and spouse coverage categories will see premium increases, particularly with a newly adopted total-family-income requirement, he said.

Using the example of an employee making $36,000 with a current family coverage premium of $291 a month, if that employee’s spouse also makes $36,000, the premium will increase to $412.

Cheatham said the Finance Board had proposed a pay-by-person premium option, a proposal soundly rejected at public hearings, since it would have hurt lower-salaried employees with larger families.

The suggestion that those employees could see savings by putting their children on the Children’s Health Insurance Plan also was shot down at public hearings, he said.

“The teachers of the state of West Virginia and the employees of the state of West Virginia have a lot of pride, and they look at CHIP as a charity program,” he said.

Administration Secretary John Myers said an internal audit has concluded that the state owns 1,150 structures insured for $500,000 or more.

“It’s quite a portfolio of real estate,” he said.
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