§ 1944. Vermont Teachers' Retirement Fund

(a) Pension Fund. All of the assets of the System shall be credited to the Vermont Teachers' Retirement Fund.

(b) Member contributions.

(1) Contributions deducted from the compensation of members shall be accumulated in the Pension Fund and separately recorded for each member.

(2) The proper authority or officer responsible for making up each employer payroll shall cause to be deducted from the compensation of each Group A member five and one-half percent of the member's earnable compensation; from each Group C member with at least five years of membership service as of July 1, 2014, five percent of the member's earnable compensation; and from each Group C member with less than five years of membership service as of July 1, 2014, six percent of the member's earnable compensation, including compensation paid for absence as provided by subsection 1933(d) of this title. In determining the amount earnable by a member in a payroll period, the Board may consider the rate of compensation payable to such member on the first day of a payroll period as continuing throughout the payroll period, and it may omit deduction from compensation for any period less than a full payroll period if a teacher 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 shall not exceed one-tenth of one percent of the annual earnable compensation upon the basis of which such deduction is made. The actuary shall make annual valuations of the reduction to the recommended State contribution attributable to the increase from five to six percent, and the Board shall include the amount of this reduction in its written report pursuant to subsection 1942(r) of this title.

(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 Group A and Group C member shall be deemed to consent and agree to the deductions made and provided for herein, and shall receipt for the member's full salary or compensation, and payment of salary or 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 chapter.

(4) The proper authority or officer responsible for making up each employer payroll shall certify to the Board the amounts deducted on each and every payroll, and each of such amounts shall be paid into the Pension Fund and credited to the individual account of the member from whose compensation the deduction was made.

(A) All employer reports and corresponding member contributions required by this subdivision (4) shall be provided by the due date established by the Board. Employers providing reports or remitting contributions, which are more than 30 days delinquent, may be assessed a delinquent reporting fee of one percent of the amount that should have been reported and remitted for each month, or prorated portion of a month, that the report or contributions are delinquent.

(B) All employers shall provide accurate reports. Employers providing inaccurate reports shall be responsible for correcting any deficiencies and shall reimburse the System for any costs incurred by the System as a result of inaccuracy.

(C) In the event that an employer willfully files an inaccurate report, in addition to any other penalties provided by law, the employer shall pay the System an administrative penalty of up to 50 percent of the amount that was not accurately reported.

(D) The System may enforce the provisions of this subdivision (4) in Washington Superior Court.

(E) The Board may, in its discretion, waive part or all of a penalty assessment for good cause shown.

(5) [Repealed.]

(6) Any Group A member who has rendered service outside the State in the capacity of a teacher and as approved by the Board, or who was a teacher in Vermont on July 1, 1947 and elected not to join the System but who has subsequently joined, may:

(A) Elect to have included in the member's creditable service all or part of any period of service outside the State. Any Group A member who so elects shall deposit in the Pension Fund by a single contribution an amount computed at regular interest to be sufficient to provide at age 60 an annuity equal to one-120th of the member's average final compensation multiplied by the number of years of service rendered outside the State for which the member elects to receive credit. No application may be accepted for the purchase of credit for service outside the State, however, if at the time of application the member has a vested right to retirement benefits in another retirement system based upon that service.

(B) Elect to have included in the member's creditable service all or part of any service with which the member was credited immediately prior to any refund of the member's accumulated contributions, including prior service, as defined in section 1931 of this title, which shall be restored upon full restoration of previous membership service as provided herein. Any Group A member who so elects shall deposit in the Pension Fund by a single contribution an amount equal to the amount of accumulated contributions previously withdrawn together with regular interest thereon from the date of the refund to the date of repayment, or a proportionate part of that amount if less than the full period of previous service is to be included in the member's creditable service. If a member has received a refund of the member's accumulated contributions more than once, the member may elect the period or periods of previous service on account of which the member will make contributions under this subdivision (b)(6) subject to the aforesaid limitation. Any Group A member who elects to repay any amount previously refunded shall continue thereafter to contribute to the System the proportion of earnable compensation determined on the basis of the member's age on the date on which the member shall have last become a member.

(C) Elect to have included in the member's creditable service those years of teaching in Vermont rendered between July 1, 1947 and July 1, 1972 for which no contributions to the System have been made. Any Group A member who so elects shall deposit in the Pension Fund by a single contribution an amount computed at regular interest to be sufficient to provide at age 60 an annuity equal to one-120th of the member's average final compensation multiplied by the number of years of service for which the member elects to receive credit.

(7) The contributions of a member, and such interest as may be allowed thereon, paid upon the member's death or withdrawn by the member as provided in this chapter, shall be paid from the Pension Fund.

(8) Any Group A or Group C member who has rendered 15 years of creditable teaching service and who has, prior to becoming a member of the System, served a minimum of one full year of full-time service in the military, one full year of full-time service as a member of the Cadet Nurse Corps in World War II, the Peace Corps, VISTA, or AmeriCorps for which the member has derived no military or other pension benefits, may elect to have included in the member's creditable service all or any part of the member's military, Cadet Nurse Corps, Peace Corps, VISTA, or AmeriCorps service not exceeding five years. Any Group A member who elects credit under this subdivision shall deposit in the Pension Fund by a single contribution an amount computed at regular interest to be sufficient to provide at age 60 an annuity equal to one-120th of the member's average final compensation multiplied by the number of years of the service rendered for which the member elects to receive credit. Any Group A member who elects credit for service in the Cadet Nurse Corps under this subdivision and any Group C member who elects credit under this subdivision shall deposit in the Pension Fund by a single contribution an amount computed at regular interest to be sufficient to provide at normal retirement an annuity equal to one and two-thirds or two percent, whichever is applicable pursuant to section 1937 of this title, of the member's average final compensation multiplied by the number of years of the service for which the member elects to receive credit. Notwithstanding the provisions of this subdivision, any Group C member who was a Group B member and any Group A member shall, upon application, be granted up to three years of credit for military service during the periods June 25, 1950 through January 31, 1955, February 28, 1961 through August 4, 1964 if service was performed while in what is now the Republic of Vietnam, and August 5, 1964 through May 7, 1975 and shall not be required to make a contribution, provided the member has rendered 15 years of creditable teaching service and prior to becoming a member served a minimum of one full year of full-time service in the military for which he or she has derived no military pension benefits. Notwithstanding the foregoing, in the event of a conflict between the provisions of this subsection and the provisions of 10 U.S.C. § 12736 concerning the counting of the same full-time military service toward both military and State pensions, the provisions of the U.S. Code shall control.

(9) Contributions required under this subsection shall be limited to contributions from Group A and Group C members.

(10) [Repealed.]

(11) Any Group A or Group C member who rendered service in the capacity of a teacher, as defined by the Board, in an approved public or independent school that was not a part of the System may elect to have included in the member's creditable service all or part of any period of service in such approved school. Any member who so elects shall deposit in the Pension Fund by a single contribution an amount computed at regular interest to be sufficient to provide at normal retirement an annuity equal to one and two-thirds or two percent, whichever is applicable pursuant to section 1937 of this title, of the member's average compensation multiplied by the number of years of service for which the member elects to receive credit. No application for credit under this subdivision shall be granted if at the time of application, the member has a vested right to retirement benefits in another retirement system based upon that service.

(12) Any Group A or Group C member may elect to have included in the member's creditable service years of service during which the member exercised his or her option not to be a member of the System. Any member who so elects shall deposit in the Pension Fund by a single contribution an amount computed at regular interest to be sufficient to provide at normal retirement an annuity equal to one and two-thirds or two percent, whichever is applicable pursuant to section 1937 of this title, of the member's average compensation multiplied by the number of years of service for which the member elects to receive credit.

(13) Any Group A or Group C member may elect to have included in the member's creditable service all or any part of the member's service in the capacity of a teacher in a school that was a part of the System for which the member has no credit. Any member who so elects shall deposit in the Pension Fund by a single contribution an amount computed at regular interest to be sufficient to provide at normal retirement an annuity equal to one and two-thirds or two percent, whichever is applicable pursuant to section 1937 of this title, of the member's average final compensation multiplied by the number of years of the service for which the member elects to receive credit.

(14) Any Group C member may elect to increase his or her retirement allowance for years of service as a Group B member prior to July 1, 1990 from one and one-quarter percent of average final compensation to one and two-thirds percent of average final compensation. A member making an election under this subdivision shall deposit in the Pension Fund by a single contribution an amount computed at regular interest to be sufficient to provide at normal retirement an annuity equal to one and two-thirds percent of the member's average final compensation multiplied by the number of years of service for which the member elects to increase his or her retirement allowance.

(15) Notwithstanding any provision to the contrary and except for military credit elected under subdivision (8) of this subsection, a member may not elect more than a total of 10 years of creditable service under the provisions of this subsection.

(16) Any time a member is required to make a single contribution in connection with an election under this subsection, a member may, with the approval of the Board, contribute over a maximum of five years in installments of equal value toward the purchase of service. Those contributions shall become a part of the member's accumulated contribution and shall be treated for all purposes in the same manner as the contributions made under subdivision (2) of this subsection. Any member who retires before completing payment as approved by the Board for the purchase of service under subdivisions (6) through (14) of this subsection shall receive pro rata credit for service purchased before the date of retirement, but if the member so elects at the time of retirement, the member may pay as much in a single sum as is necessary to provide full credit at that time.

(17) Any member may elect to have included in the member's creditable service years of service as a State or municipal employee. Any member who so elects shall deposit in the Pension Fund by a single contribution an amount computed at regular interest to be sufficient to provide at normal retirement an annuity equal to one and two-thirds or two percent, whichever is applicable pursuant to section 1937 of this title, of the member's average compensation multiplied by the number of years of service for which the member elects to receive credit. No application for credit under this subdivision shall be granted if at the time of application, the member has a vested right to retirement benefits in another retirement system based upon that service.

(c) State contributions, earnings, and payments.

(1) All State appropriations and all reserves for the payment for all pensions including all interest and dividends earned on the assets of the Retirement System shall be accumulated in the Pension Fund. All benefits payable under the System, except for retired teacher health and medical benefits, shall be paid from the Pension Fund. Annually, the Retirement Board shall allow regular interest on the individual accounts of members in the Pension Fund which shall be credited to each member's account.

(2) Beginning with the actuarial valuation as of June 30, 2006, the contributions to be made to the Pension 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 by the State into the Pension Fund a percentage of the earnable compensation of each member to be known as the "normal contribution" and an additional percentage of the member's earnable compensation to be known as the "accrued liability contribution." The percentage rate of such contributions shall be fixed on the basis of the liabilities of the System as shown by actuarial valuation. "Normal contributions" and "accrued liability contributions" shall be by separate appropriation in the annual budget enacted by the General Assembly.

(3) The normal contribution shall be the uniform percentage of the total compensation of members that, 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 pension benefits after subtracting the sum of the unfunded accrued liability and the total assets of the Pension Fund.

(4) It is the policy of the State of Vermont to liquidate fully the unfunded accrued liability to the System. Beginning on July 1, 2008, until the unfunded accrued liability is liquidated, the 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 or 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.

(5)-(11) [Repealed.]

(12) [Repealed.]

(d), (e) [Repealed.]

(f) Expenses. The expenses of the System, including all the expenses necessary in connection with the administration and operation of the System, shall be paid from the Pension and Benefits Funds.

(g) Collection of contributions.

(1) The proper authority or officer responsible for making up the payroll shall draw his or her warrant, at such intervals as may be agreed upon with the Board but at least semiannually, payable to the System for all contributions deducted from the compensation of members, and shall transmit the same to the Board, together with such schedule of the contributions included therein as the Board may require.

(2) The Board shall certify to the Governor-Elect, as required by 32 V.S.A. § 301, an estimate of the contributions of the State that will become due and payable during the two years next following to meet the requirements of the Pension Fund of the System, and shall certify the percentage of payroll of all members that is equivalent to such amount. The amounts so certified shall be included in the budget submitted to the General Assembly. When appropriated, the Commissioner of Finance and Management shall issue his or her warrant in favor of the System for the amount certified by the Board to be necessary to carry out the provisions of this section.

(h) Notwithstanding the provisions of subdivision 1944(b)(2) of this title to the contrary and pursuant to the provisions of Section 414(h) of the Internal Revenue Code, the State or political subdivisions employing such members shall pick up and pay the contributions required to be paid by Group A and Group C members with respect to service rendered on and after July 1, 1992. Contributions picked up by the State or political subdivisions employing such members shall be designated for all purposes as member contribution, 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 or political subdivisions employing such members. 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 Pension Fund.

(i) [Repealed.]  (Amended 1959, No. 42, §§ 1, 2; 1959, No. 72, §§ 4, 5, eff. April 1, 1959; 1959 (Adj. Sess.), No. 328, § 8(b); 1963, No. 182, § 3; 1971, No. 187 (Adj. Sess.); 1971, No. 233 (Adj. Sess.), §§ 2-4; 1973, No. 141 (Adj. Sess.), § 7; 1975, No. 175 (Adj. Sess.), § 3; 1977, No. 53, §§ 2, 4, eff. April 23, 1977; 1977, No. 247 (Adj. Sess.), §§ 191-193, 195; 1981, No. 41, §§ 31-34, 39(3); 1983, No. 149 (Adj. Sess.), § 1; 1983, No. 195 (Adj. Sess.), § 5(b); 1989, No. 78, §§ 8, 9; 1989, No. 169 (Adj. Sess.), § 7; 1991, No. 24, § 11; 1991, No. 247 (Adj. Sess.), §§ 1-4; 1993, No. 49, §§ 24, 25, eff. May 28, 1993; 1995, No. 36, § 7; 1995, No. 178 (Adj. Sess.), § 179a; 1999, No. 53, §§ 7, 7a; 1999, No. 158 (Adj. Sess.), § 5; 2001, No. 29, § 6; 2001, No. 63, § 175; 2001, No. 142 (Adj. Sess.), § 206; 2003, No. 122 (Adj. Sess.), § 297f; 2005, No. 163 (Adj. Sess.), § 7; 2005, No. 165 (Adj. Sess.), § 3; 2005, No. 215 (Adj. Sess.), § 277; 2007, No. 13, § 33; 2007, No. 137 (Adj. Sess.), § 7; 2009, No. 24, § 6a; 2009, No. 74 (Adj. Sess.), § 6; 2009, No. 139 (Adj. Sess.), § 6; 2013, No. 179 (Adj. Sess.), § E.514.2; 2015, No. 18, § 7; 2015, No. 172 (Adj. Sess.), § E.514.1; 2017, No. 165 (Adj. Sess.), § 18.)