Plan Sponsor.com reports Virginia will start automatically enrolling its state employees into defined contribution plans for all workers hired after January 1, 2008.
Virginia state employees will have $20 each pay period deferred from their paychecks, with a state contribution of $10. However, no decision has been reached on default investment options according to Jeanne Chenault, the Director of Public Relations for the VRS.
Participants have a 90-day period to opt out of the plan before compensation is deferred from their paychecks and another 90 days to opt out after they receive notice that deferment has started, Chenault said.
New and rehired state employees will receive a letter from Great-West Retirement Services, the service provider, advising them of the benefits of the program and giving directions for opting out of the plan. Chenault added that the measure only affects state workers and not employees of Virginia local government agencies.
It is so far unclear whether other states have already embarked on the same path as Virginia, said Tracey Tucker, the director of the Texas-based National Association of Government Defined Contribution Administrators, Inc. (NAGDCA). However, Tucker said similar legislation has been discussed in Oregon, West Virginia, and Texas.
The developments in Virginia come about as the trend favoring auto plan features, including auto enrollment and auto deferral increases, continues sweeping across the retirement services landscape.