An Update on the Framework to Strengthen Your Pension

April 6, 2022

As you know, the legislature’s pension task force released its recommendations for strengthening the pensions relied on by teachers, state employees, and state troopers. Those recommendations are now in the form of a bill, S.286. Last week, the Senate passed the pension bill by a unanimous and bipartisan vote of 28-0. Here are the highlights of that bill, which reflect the total package recommendation from the Task Force and is now being considered in the House:

• The state will make an unprecedented one-time contribution of $125 million that will reduce the Vermont State Teachers Retirement System’s underfunding.
• The state is committing to make all annual payments as determined by actuaries, and, beginning in fiscal year 2024, the state will make an additional $15 million a year on top of that.
• The state will also commit to placing 25 percent of any budget surplus into a fund that will be used to pay for eventual hikes in the cost-of-living adjustment payment to retirees.
• The state is making a one-time $13.3 million from the Education Fund to pre-fund retiree healthcare benefits and is also looking to move retiree healthcare benefits prefunding costs to the Education Fund to the tune of $15 million annually.
• Teachers will see a progressive approach to the amount they contribute to the system that will be phased-in over time and will be based on a teachers’ salary.
• For the first time, there will be a path and a process, with dedicated funding, to increase annual COLA payments once the system is 80 percent funded.
• The measure does not change how long a teacher has to work before retiring; does not change the formula for determining the retirement benefit and does not reduce benefits. The bill also protects the defined-benefit nature of your pension system.