CHARLESTON, W.Va. -- Future West Virginia public employees would have to work longer before retiring, pay more toward their pensions and lose ways to boost their benefits under a proposal being discussed at the Legislature.
As the baby boomer generation continues to retire, those that replace them may end up with leaner pension benefits as lawmakers consider joining other states in tackling funding shortfalls made worse by the Great Recession.
A joint House-Senate committee is weighing several options in the face of an estimated $5.6 billion gap between on-hand assets and benefits promised by five state retirement programs.
The main plan for public employees would see the biggest changes from the proposal under review. Those retirees now receive an annual pension based on years of service and the average of their three final annual salaries. The proposal would increase the range of the average to five years for new hires, potentially decreasing the benefit.
New hires would retire at age 62, instead of the current 60. They would lose early retirement incentives and see the credit for unused sick or annual leave cut in half, with two days of credit for each day of leftover leave reduced to one day credited toward their tenure.
But the biggest change would shift the contribution burden toward pensions from the state to the employees, increasing their share from 4.5 percent of their pay to 6 percent.
Harry Mandel, actuary for the state Consolidated Public Retirement Board, declined to put a dollar figure on these proposed changes when he outlined them to the joint interim committee last week. But he estimated that they would save an amount equal to nearly 2.5 percent of the payroll for the program's 36,200 or so active enrollees.
"It's basically a fairly significant savings if we look at all future hires,'' Mandel said. "What we're really impacting is what we call the normal costs, the costs of benefits being earned during the year.''