VRS Hybrid Defined Contribution Training

About the Program

Category: Personnel Management, Employment and Training (Best in Category)

Year: 2016

During the 2012 General Assembly, a series of pension plan changes were approved to ensure the sustainability of the retirement programs offered through VRS. One of those changes was the creation of the VRS Hybrid Retirement Plan. The Hybrid Plan is the retirement program for employees hired on or after 1/1/14 with the exception of public safety and employees with non-refunded prior service. The Hybrid Plan has defined benefit (DB) and defined contribution (DC) components. Because the plan was developed to include two contribution components, the monthly retirement benefit from the required contributions alone does not provide an adequate pension benefit. Additional DC contributions are essential and, combined with the DB, provide employees with an adequate retirement benefit. During the first 10 months of the plan, Chesterfield County had very low participation in the Hybrid DC plan. As of October, 2014, the county had hired 150 new employees who were in the Hybrid plan, but only 4 of those employees (2.7%) signed up for additional voluntary contributions. A training program for Hybrid plan participants was developed which focuses on the importance of increased voluntary contributions to the DC plan. The training is mandatory. Meeting dates are coordinated through departmental liaisons and department directors. The training includes important information about VRS, the Hybrid Plan and the DC plan with a presentation from ICMA-RC, the DC vendor. By focusing on the importance of increased voluntary DC contributions, the training shows employees how to maximize their retirement benefit by highlighting the significant difference between the retirement benefits for employees who contribute the maximum and get the employer match versus those who do not. Laptops are be set up in the training room so that employees can enroll after the session was over. By making sure that employees are given enough information to make informed choices about their options, the training program has resulted in a significant increase in the number of employees making additional voluntary contributions to the Hybrid DC Plan.