Gubernatorial rivals vow to keep pension contributions

Both candidates for Virginia governor pledged yesterday that they would not reduce the state's current level of contribution to the retirement benefits of state employees.

Last week, Gov. Timothy M. Kaine said the state would defer its quarterly employer contribution to workers' pensions in the Virginia Retirement System for the last quarter of fiscal 2010. The move is part of a wide-ranging effort to close an anticipated $1.35 billion revenue shortfall in the state budget.

But Kaine and administration officials also indicated that they are considering a change that could require the state's 100,000 employees to contribute a portion of their salaries toward their pensions. Such a shift could be incorporated into the budget for the 2011-2012 fiscal years, which Kaine will submit in December before his term expires.

"The tough fiscal climate is no excuse for breaking a longstanding commitment to the men and women who have dedicated their careers to the service of Virginia's people," said Republican candidate Bob McDonnell. "That promise cannot be broken."

Democratic candidate R. Creigh Deeds also said he would keep the promise despite tough economic times.

"While Creigh Deeds understands the difficult nature of these decisions, as governor he will uphold the solemn promise of Virginia to its state employees by protecting their hard-earned retirement benefits," according to Deeds spokesman Jared Leopold.

But McDonnell, a former state attorney general, and Deeds, a state senator from Bath County, also did not rule out changing the rules for future state workers to keep the pension fund solvent.

Kaine said the pension deferral for state employees -- coupled with a deferral of the money the state also provides to local governments for teacher-retirement programs funded through the Standards of Quality -- would allow the state to trim $104 million from the budget for the year.

The governor said the money would be paid back to the system over time and would not affect the retirement benefits of current employees. The deferral was announced along with nearly 600 layoffs, closures of three correctional facilities and statewide agency reductions.

Currently Virginia, as an employer, contributes 6.26 percent of state workers' annual salaries toward their pensions in the VRS. Since 1983, in lieu of a pay raise at the time, the state also has paid the workers' portion of the pension, contributing an additional 5 percent.

A 2008 study suggested that employees be asked to gradually contribute up to 2 percent of their salaries. But the study was done before the collapse of the financial markets, during which VRS lost 21 percent of its assets.

Analysts now say that program benefits for future retirees will have to change, or contributions to the fund will need to increase 4 percent to 6 percent to maintain the same level of benefits over the next 20 to 30 years.

Contact Jim Nolan at (804) 649-6061 or .