Only three State retirement systems remain today outside the administrative jurisdiction of the Board of Trustees of the Virginia Supplemental Retirement System and operate without planning or funding on an actuarially sound basis. The three systems and funds, which continue to be administered apart from the major State retirement programs; are those for (1) Judges, Commissioners and Assistant Attorneys General (2) Clerks of the Senate and House of Delegates, and (3) County Court Judges.

These three retirement systems were developed over the years to provide retirement benefits for these rather special categories and limited numbers of personnel, and this development has taken place without regard to basic retirement funding and planning principles or actuarial considerations.

The contrast between these retirement systems and the retirement program now established for the bulk of the State's employees, teachers and police naturally raises: questions concerning the function and operation of these special systems and the State's obligations under them. These questions were raised by the 1966 General Assembly which directed the Council to conduct this study by the adoption of House Joint Resolution No. 124.

As a first step in undertaking this study, the Council employed the actuarial firm of Bowles, Andrews and Towne to act as consultants to the Council and to examine these three systems to determine their actuarial soundness as presently operated.

A copy of the Report of the consultants dealing with this subject is set out in Appendix I, and it spells out their calculations concerning the financial status of the systems, the adequacy of State contributions and member contributions, and the conclusion of the consultants that these systems are far from being actuarially sound. In addition, their Report to the Council includes a useful and clear discussion of the methods by which retirement plans may be funded and the liabilities which the State incurs under the present pay-as-you go approach as contrasted with a prefunded program.

The Council carefully reviewed the Report submitted by the consultants and in addition reviewed with them a series of. suggested changes to place these systems on an actuarially sound basis. The possible revisions in these systems which the Council has examined and which would be calculated to place these systems on a sounder basis actuarially, to simplify their administration, to eliminate some of the discrepancies among these systems and to bring them more closely in accord with the retirement treatment afforded by the State to the bulk of State employees, are all of necessity related matters and raise important questions especially as they affect the participants in these systems.

In view of the serious questions which arise in any determination of the funding and actuarial soundness of these systems and which concern the benefits to be paid, the rates of member and State contributions, mandatory participation and retirement, and eligibility for retirement, it is the conclusion of the Council that further study should be conducted which will involve the members of the systems.