§ 473. Funds
(a) Assets. All of the assets of the Retirement System shall be credited to the Vermont State
Retirement Fund.
(b) Member contributions.
(1) Allocations and periodic review.
(A) Allocations. 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 Group
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 that is the actuarial equivalent of such amount, in the same manner
as the benefit otherwise payable under the System.
(B) Periodic review. 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.
(2) Groups A, C, D, F, and G members.
(A) Group A members. Commencing on July 1, 2016, contributions shall be 6.55 percent of compensation for
Group A members.
(B) Group C members.
(i) Commencing the first full pay period in fiscal year 2023, the contribution rate for
Group C members shall be 8.93 percent of compensation.
(ii) Commencing the first full pay period in fiscal year 2024, the contribution rate for
Group C members shall be 9.43 percent of compensation.
(iii) Commencing the first full pay period in fiscal year 2025 and annually thereafter,
the contribution rate for Group C members shall be 9.93 percent of compensation.
(C) Group D members. Commencing on July 1, 2022, the contribution rate for Group D members shall be based
on the highest quartile in which a member’s hourly rate of pay falls. Quartiles shall
be determined annually in the first full pay period of each fiscal year by the Department
of Human Resources based on the hourly rate of pay by all Group D members. The contribution
rates shall be based on the schedule set forth below:
(i) Based on the quartiles for the first full pay period of each fiscal year and effective
the first full pay period in that fiscal year, for members who have an hourly rate
of pay in any pay period below the 25th percentile of Group D member hourly rates
of pay, the contribution rate shall be 6.55 percent of compensation.
(ii) Based on the quartiles for the first full pay period of each fiscal year and effective
the first full pay period in that fiscal year, for members who have an hourly rate
of pay in any pay period at the 25th percentile and below the 50th percentile of Group
D member hourly rates of pay, the contribution rate shall be as follows:
(I) commencing in fiscal year 2023, 7.05 percent of compensation;
(II) commencing in fiscal year 2024, 7.55 percent of compensation; and
(III) commencing in fiscal year 2025 and annually thereafter, 8.05 percent of compensation.
(iii) Based on the quartiles for the first full pay period of each fiscal year and effective
the first full pay period in that fiscal year, for members who have an hourly rate
of pay in any pay period at the 50th percentile and below the 75th percentile of Group
D member hourly rates of pay, the contribution rate shall be as follows:
(I) commencing in fiscal year 2023, 7.05 percent of compensation;
(II) commencing in fiscal year 2024, 7.55 percent of compensation;
(III) commencing in fiscal year 2025, 8.05 percent of compensation; and
(IV) commencing in fiscal year 2026 and annually thereafter, 8.55 percent of compensation.
(iv) Based on the quartiles for the first full pay period of each fiscal year and effective
the first full pay period in that fiscal year, for members who have an hourly rate
of pay in any pay period at or above the 75th percentile of Group D member hourly
rates of pay, the contribution rate shall be as follows:
(I) commencing in fiscal year 2023, 7.05 percent of compensation;
(II) commencing in fiscal year 2024, 7.55 percent of compensation;
(III) commencing in fiscal year 2025, 8.05 percent of compensation;
(IV) commencing in fiscal year 2026, 8.55 percent of compensation; and
(V) commencing in fiscal year 2027 and annually thereafter, 9.05 percent of compensation.
(D) Group F members. Commencing on July 1, 2022, the contribution rate for Group F members shall be based
on the quartile in which a member’s hourly rate of pay falls. Quartiles shall be determined
annually in the first full pay period of each fiscal year by the Department of Human
Resources based on the combined hourly rate of pay of all Group F and Group G members.
The contribution rates shall be based on the schedule set forth below:
(i) Based on the quartiles for the first full pay period of each fiscal year and effective
the first full pay period in that fiscal year, for members who have an hourly rate
of pay in any pay period below the 25th percentile of Group F and Group G member hourly
rates of pay, the contribution rate shall be 6.55 percent of compensation.
(ii) Based on the quartiles for the first full pay period of each fiscal year and effective
the first full pay period in that fiscal year, for members who have an hourly rate
of pay in any pay period at the 25th percentile and below the 50th percentile of Group
F and Group G member hourly rates of pay, the contribution rate shall be as follows:
(I) commencing in fiscal year 2023, 7.05 percent of compensation;
(II) commencing in fiscal year 2024, 7.55 percent of compensation; and
(III) commencing in fiscal year 2025 and annually thereafter, 8.05 percent of compensation.
(iii) Based on the quartiles for the first full pay period of each fiscal year and effective
the first full pay period in that fiscal year, for members who have an hourly rate
of pay in any pay period at the 50th percentile and below the 75th percentile of Group
F and Group G member hourly rates of pay, the contribution rate shall be as follows:
(I) commencing in fiscal year 2023, 7.05 percent of compensation;
(II) commencing in fiscal year 2024, 7.55 percent of compensation;
(III) commencing in fiscal year 2025, 8.05 percent of compensation; and
(IV) commencing in fiscal year 2026 and annually thereafter, 8.55 percent of compensation.
(iv) Based on the quartiles for the first full pay period of each fiscal year and effective
the first full pay period in that fiscal year, for members who have an hourly rate
of pay in any pay period at or above the 75th percentile of Group F and Group G member
hourly rates of pay, the contribution rate shall be as follows:
(I) commencing in fiscal year 2023, 7.05 percent of compensation;
(II) commencing in fiscal year 2024, 7.55 percent of compensation;
(III) commencing in fiscal year 2025, 8.05 percent of compensation;
(IV) commencing in fiscal year 2026, 8.55 percent of compensation; and
(V) commencing in fiscal year 2027 and annually thereafter, 9.05 percent of compensation.
(E) Group G members. Commencing on July 1, 2023, the contribution rate for Group G members shall be based
on the quartile in which a member’s hourly rate of pay falls. Quartiles shall be determined
annually in the first full pay period of each fiscal year by the Department of Human
Resources based on the combined hourly rate of pay of all Group F and Group G members.
The contribution rates shall be based on the schedule set forth below:
(i) Based on the quartiles for the first full pay period of each fiscal year and effective
the first full pay period in that fiscal year, for members who have an hourly rate
of pay in any pay period below the 25th percentile of Group F and Group G member hourly
rates of pay, the contribution rate shall be 11.23 percent of compensation.
(ii) Based on the quartiles for the first full pay period of each fiscal year and effective
the first full pay period in that fiscal year, for members who have an hourly rate
of pay in any pay period at the 25th percentile and below the 50th percentile of Group
F and Group G member hourly rates of pay, the contribution rate shall be as follows:
(I) commencing in fiscal year 2024, 12.23 percent of compensation; and
(II) commencing in fiscal year 2025 and annually thereafter, 12.73 percent of compensation.
(iii) Based on the quartiles for the first full pay period of each fiscal year and effective
the first full pay period in that fiscal year, for members who have an hourly rate
of pay in any pay period at the 50th percentile and below the 75th percentile of Group
F and Group G member hourly rates of pay, the contribution rate shall be as follows:
(I) commencing in fiscal year 2024, 12.23 percent of compensation;
(II) commencing in fiscal year 2025, 12.73 percent of compensation; and
(III) commencing in fiscal year 2026 and annually thereafter, 13.23 percent of compensation.
(iv) Based on the quartiles for the first full pay period of each fiscal year and effective
the first full pay period in that fiscal year, for members who have an hourly rate
of pay in any pay period at or above the 75th percentile of Group F and Group G member
hourly rates of pay, the contribution rate shall be as follows:
(I) commencing in fiscal year 2024, 12.23 percent of compensation;
(II) commencing in fiscal year 2025, 12.73 percent of compensation;
(III) commencing in fiscal year 2026, 13.23 percent of compensation; and
(IV) commencing in fiscal year 2027 and annually thereafter, 13.73 percent of compensation.
(3) Deductions. The deductions provided for in this section 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
for in this section 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) Additional contributions. Subject to the approval of the Retirement Board, in addition to the contributions
deducted from compensation as provided for in this section, 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 that the member previously withdrew from this System or
one of the predecessor systems; or any member may deposit in the Fund by a single
payment or by an increased rate of contribution an amount computed to be sufficient
to purchase an additional annuity that, 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) Beneficiaries. The contributions of a member and such interest as may be allowed thereon that 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) Scope. Contributions required under this subsection shall be limited to contributions from
Group A, Group C, Group D, Group F, and Group G members.
(7) [Repealed.]
(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
that 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 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 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.
(5)-(7) [Repealed.]
(8) Annually, the Board shall certify an amount to pay the annual actuarially determined
employer contribution, as calculated in this subsection, and additional amounts as
follows:
(A) in fiscal year 2024, the amount of $9,000,000.00;
(B) in fiscal year 2025, the amount of $12,000,000.00; and
(C) in fiscal year 2026 and in any year thereafter when the Fund is calculated to have
a funded ratio of less than 90 percent, the amount of $15,000,000.00.
(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 that will become due and payable during the next biennium. The contributions
of the State to pay the annual actuarially determined employer contribution and any
additional amounts pursuant to subdivision (c)(8) of this section shall be charged
to the departmental appropriation from which members’ salaries are paid and shall
be included in each departmental budgetary request. Annually on or before January
15, the Commissioner of Finance and Management shall provide to the General Assembly
a breakdown of the components of the payroll charge applied to each department’s budget
in the current fiscal year and anticipated to apply in the upcoming fiscal year. This
report shall itemize the percentages of payroll assessments to fund:
(1) the actuarially determined employer contribution to the Vermont State Retirement System;
(2) any additional payments made pursuant to subdivision (c)(8) of this section to the
Vermont State Retirement System; and
(3) the employer contribution to the State Employees’ Postemployment Benefits Trust Fund
made pursuant to subdivision 479a(e)(3) of this title.
(e) [Repealed.]
(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 (b)(2) of this section 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; 2009, No. 24, § 4a; 2011, No. 63, § H.4; 2015, No. 114 (Adj. Sess.), § 4; 2015, No. 172 (Adj. Sess.), § E.133.1; 2017, No. 74, § 2; 2021, No. 114 (Adj. Sess.), § 11, eff. July 1, 2022; 2023, No. 3, § 98, eff. March 20, 2023; 2023, No. 78, § E.107, eff. July 1, 2023; 2023, No. 85 (Adj. Sess.), § 2, eff. July 1, 2024; 2025, No. 18, § 10, eff. May 13, 2025.)