§ 473. Funds
(a) All of the assets of the Retirement System shall be credited to the Vermont State Retirement Fund.
(b) Member contributions.
(1) Contributions deducted from the compensation of members together with any member contributions transferred thereto from the predecessor systems shall be accumulated in the Fund and separately recorded for each member. The amounts so transferred on account of group A members shall be allocated between regular and additional contributions. The amounts so allocated as regular contributions shall be determined as if the rate of contribution of four percent has been continuously in effect in the predecessor system from which such amounts were transferred and the balance of any amount so transferred on account of any group A member shall be deemed additional contributions. In the case of group C members who were members as of the date of establishment and D members, all contributions transferred from predecessor systems shall be deemed regular contributions. Those members who, prior to the date of establishment of this system, had been contributing at a rate less than four percent shall have any benefit otherwise payable on their behalf actuarially reduced to reflect such prior contribution rate of less than four percent. Upon a member’s retirement or other withdrawal from service on the basis of which a retirement allowance is payable, the member’s additional contributions, with interest thereon, shall be paid as an additional allowance equal to an annuity which is the actuarial equivalent of such amount, in the same manner as the benefit otherwise payable under the System.
(2) Commencing on July 1, 2016, contributions shall be 6.55 percent of compensation for group A, D, and F members and 8.43 percent of compensation for group C members. When the State Employees’ Retirement System has been determined by the actuary to have assets at least equal to its accrued liability, contribution rates will be reevaluated by the actuary with a subsequent recommendation to the General Assembly. In determining the amount earnable by a member in a payroll period, the Retirement Board may consider the annual or other periodic rate of earnable compensation payable to such member on the first day of the payroll period as continuing throughout such payroll period, and it may omit deduction from compensation for any period less than a full payroll period if an employee was not a member on the first day of the payroll period, and to facilitate the making of deductions it may modify the deduction required of any member by such an amount as, on an annual basis, shall not exceed one-tenth of one percent of the annual earnable compensation upon the basis of which such deduction is to be made. Each of the amounts shall be deducted until the member retires or otherwise withdraws from service, and when deducted shall be paid into the Annuity Savings Fund, and shall be credited to the individual account of the member from whose compensation the deduction was made.
(3) The deductions provided for herein shall be made notwithstanding that the minimum compensation provided for by law for any member shall be reduced thereby. Every member shall be deemed to consent and agree to the deductions made and provided herein and shall receipt for full compensation, and payment of compensation less such deduction shall be a full and complete discharge and acquittance of all claims and demands whatsoever for the services rendered by such person during the period covered by such payment, except as to the benefits provided under this subchapter.
(4) Subject to the approval of the Retirement Board, in addition to the contributions deducted from compensation as hereinbefore provided, any member may redeposit in the Fund by a single payment or by an increased rate of contribution an amount equal to the total amount which the member previously withdrew from this System or one of the predecessor systems; or any member may deposit therein by a single payment or by an increased rate of contribution an amount computed to be sufficient to purchase an additional annuity which, together with prospective retirement allowance, will provide for the member a total retirement allowance not in excess of one-half of average final compensation at normal retirement date, with the exception of group D members for whom creditable service shall be restored upon redeposits of amounts previously withdrawn from the System, or for whom creditable service shall be granted upon deposit of amounts equal to what would have been paid if payment had been made during any period of service during which such a member did not contribute. Such additional amounts so deposited shall become a part of the member’s accumulated contributions as additional contributions.
(5) The contributions of a member and such interest as may be allowed thereon which are withdrawn by the member or paid to the member estate or to a designated beneficiary in event of the member’s death, shall be paid from the Fund.
(6) Contributions required under this subsection shall be limited to contributions from group A, group C, group D, and group F members.
Terms Used In Vermont Statutes Title 3 Sec. 473
- Accumulated contributions: shall mean the sum of all the amounts deducted from the compensation of a member together with any amount transferred to the account of the member established pursuant to this system from the respective account of said member under one or both of the predecessor systems, with interest thereon, as provided in section 473 of this title. See
- Actuarial equivalent: shall mean a benefit of equal value under the actuarial assumptions last adopted by the Retirement Board under subsection 472a(h) of this title. See
- amortization: Paying off a loan by regular installments.
- Annuity: shall mean annual payments for life derived from the accumulated contributions of a member. See
- appropriation: The provision of funds, through an annual appropriations act or a permanent law, for federal agencies to make payments out of the Treasury for specified purposes. The formal federal spending process consists of two sequential steps: authorization
- assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Average final compensation: shall mean :
- Beneficiary: shall mean any person in receipt of a pension, an annuity, a retirement allowance, or other benefit as provided by this subchapter. See
- Board: shall mean the board provided for in section 471 of this title to administer the Retirement System. See
- Creditable service: shall mean service for which credit is allowed under section 458 of this title, plus service transferred under section 495 of this title. See
- Earnable compensation: shall mean the full rate of compensation that would be payable to an employee if the employee worked the full normal working time for the employee's position. See
- Employee: shall mean :
- Group A members: shall mean employees classified under subdivision (A) of subdivision (9) of this subsection. See
- Group C members: shall mean employees classified under subdivision (B) of subdivision (9) of this subsection who become members as of the date of establishment, any person who is first included in the membership of the System on or after July 1, 1998, any person who was a group B member on June 30, 1998, who was in service on that date, and any person who was a group B member on June 30, 1998, who was absent from service on that date who returns to service on or after July 1, 1998. See
- Group D members: shall mean Justices of the Supreme Court, Superior judges, district judges, environmental judges, and probate judges. See
- liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
- Member: shall mean any employee included in the membership of the Retirement System under section 457 of this title. See
- Normal retirement date: shall mean :
- Person: shall include any natural person, corporation, municipality, the State of Vermont or any department, agency, or subdivision of the State, and any partnership, unincorporated association, or other legal entity. See
- Predecessor system: shall mean , where applicable, the Vermont Employees' Retirement System and the Vermont State Police and Motor Vehicle Inspectors' Retirement System, either one of them, or a combination thereof. See
- Regular interest: shall mean interest at such rate or rates as may be set from time to time by the Retirement Board in accordance with subsection 472(b) of this title. See
- remainder: An interest in property that takes effect in the future at a specified time or after the occurrence of some event, such as the death of a life tenant.
- Retirement System: shall mean the Vermont State Retirement System as defined in section 456 of this title. See
- Service: shall mean service as an employee for which compensation is paid by the State. See
- State: when applied to the different parts of the United States may apply to the District of Columbia and any territory and the Commonwealth of Puerto Rico. See
- Vermont State Retirement Fund: shall mean the fund created by section 473 of this title, which shall contain the assets of the Retirement System and from which shall be paid the benefits due to beneficiaries and the expenses of the Retirement System. See
(c) Employer contributions, earnings, and payments.
(1) Employer contributions and the reserves for the payment of all pensions and other benefits, including all interest and dividends earned on the assets of the Retirement System shall be accumulated in the Fund, and all benefits payable under the System and the expenses of the System shall be paid from the Fund. Annually, the Retirement Board shall allow regular interest on the individual accounts of members in the Fund which shall be credited to each member’s account within the Fund.
(2) Beginning with the actuarial valuation as of June 30, 2006, the contributions to be made to the Fund by the State shall be determined on the basis of the actuarial cost method known as "entry age normal." On account of each member there shall be paid annually into the Fund by the State an amount equal to certain percentages of the annual earnable compensation of such member, to be known as the "normal contribution," and additional amounts equal to a certain percentage of the member’s annual earnable compensation, to be known as the "basic accrued liability" and "additional accrued liability" contributions. The percentage rates of the contributions shall be fixed on the basis of the liabilities of the Retirement System as shown by actuarial valuation.
(3) The normal contribution shall be the uniform percentage of the total compensation of members which, if contributed over each member’s prospective period of service and added to such member’s prospective contributions, if any, will be sufficient to provide for the payment of all future benefits after subtracting the sum of the unfunded accrued liability and the total assets of the Fund of the Retirement System.
(4) Beginning on July 1, 2008, until the unfunded accrued liability is liquidated, the basic accrued liability contribution shall be the annual payment required to liquidate the unfunded accrued liability over a closed period of 30 years ending on June 30, 2038, provided that:
(A) From July 1, 2009 to June 30, 2019, the amount of each annual basic accrued liability contribution shall be determined by amortization of the unfunded liability over the remainder of the closed 30-year period in installments increasing at a rate of five percent per year.
(B) Beginning on July 1, 2019 and annually thereafter, the amount of each annual basic accrued liability contribution shall be determined by amortization of the unfunded liability over the remainder of the closed 30-year period in installments increasing at a rate of three percent per year.
(C) Any variation in the contribution of normal, basic, unfunded accrued liability or additional unfunded accrued liability contributions from those recommended by the actuary and any actuarial gains and losses shall be added or subtracted to the unfunded accrued liability and amortized over the remainder of the closed 30-year period.
(d) Contributions of State. As provided by law, the Retirement Board shall certify to the Governor or Governor-Elect a statement of the percentage of the payroll of all members sufficient to pay for all operating expenses of the Vermont State Retirement System and all contributions of the State which will become due and payable during the next biennium. The contributions of the State shall be charged to the departmental appropriation from which members’ salaries are paid and shall be included in each departmental budgetary request.
(f) Contributions paid by State. Notwithstanding the provisions of subdivision (b)(2) of this section to the contrary and pursuant to the provisions of Section 414(h) of the Internal Revenue Code, the State shall pick up and pay the contributions required to be paid by members with respect to service rendered on and after March 1, 1998. Contributions picked up by the State shall be designated for all purposes as member contributions, except that they shall be treated as State contributions in determining tax treatment of a distribution. Each member’s compensation shall be reduced by an amount equal to the amount picked up by the State. This reduction, however, shall not be used to determine annual earnable compensation for purposes of determining average final compensation. Contributions picked up under this subsection shall be credited to the Fund. To ensure that the provisions of this subsection are cost neutral to the State, the contributions rates established under subdivision 473(b)(2) of this title shall be increased by one-tenth of one percent of compensation. (Added 1971, No. 231 (Adj. Sess.), § 4; amended 1981, No. 41, §§ 17-19, 39(1); 1989, No. 78, § 7; 1989, No. 277 (Adj. Sess.), §§ 17r, 17w(a), eff. Jan. 1, 1991; 1993, No. 33, § 5; 1997, No. 68 (Adj. Sess.), § 7, eff. March 1, 1998; 1997, No. 89 (Adj. Sess.), § 10; 1997, No. 89 (Adj. Sess.), § 13, eff. April 13, 1998; 1999, No. 158 (Adj. Sess.), § 19; 2003, No. 122 (Adj. Sess.), § 297h; 2005, No. 215 (Adj. Sess.), § 277a; 2007, No. 12, § 1; 2007, No. 13, § 11; 2007, No. 116 (Adj. Sess.), §§ 4, 5, eff. June 7, 2008; 2009, No. 24, § 4a; 2011, No. 63, § H.4; 2015, No. 114 (Adj. Sess.), § 4; 2015, No. 172 (Adj. Sess.), § E.133.1.)