Permanent regular employees who work at least 20 hours per week are required to participate in the city's Basic Pension Plan. Sworn police officers are required to participate in the city's Police Pension Plan. Both plans are defined benefit plans that are funded by the city and employees.
Currently, employees in the Basic Pension Plan are contributing 5% of salary and police officers are contributing 7% of salary to the Police Pension Plan. Employee contributions accrue interest each year. Upon terminating employment with the city, employees may withdraw from the plan and cash out their contributions plus interest or may continue in the plan, leaving any contributions and taking a deferred benefit.
Employees become fully vested after 5 years of credited service in either plan (vested means that you have the rights of ownership of your pension benefit although enjoyment of that pension is delayed until a future date).
Early Retirement Benefit
There are 2 ways to qualify for an early retirement benefit in the Basic Pension Plan:
Employees who reach the Rule of 90 (the sum of the employee's years of service to the city and their chronological age total 90) and who are at least 50 years old, are eligible for an "unreduced early retirement." These employees may retire earlier than their normal retirement age, and their benefit will be calculated at 1.8% for each year of service; in addition, they will receive an additional $200 per month until they reach their normal retirement date.
Employees who reach age 52 and have been in the Pension Plan for at least 10 years, but do not qualify for the Rule of 90. The benefit is calculated at 1.8% for each year of service and a reduction is applied to the benefit. An employee does not receive an additional $200 per month until their normal retirement date under this option.
For the Police Pension Plan, officers hired on or before December 8, 1986, can retire after completing 20 years of service with no reduction. Officers hired after December 8, 1986, qualify after reaching age 50 and 25 years in the Police Pension Plan.
Normal Retirement Benefit
This benefit is calculated at 1.8% per year for each year of employment based on the employee's highest consecutive 5-year salary. The normal retirement date is the 1st day of the calendar month coinciding with or following the attained social security retirement age.
For the Police Pension Plan this benefit is calculated at 2.8% per year for the 1st 20 years of credit service and 3% per year for all years in excess of 20 years. The normal retirement date for officers hired on or before December 8, 1986 is the earlier of age 62 or the completed 25 years in the Police Pension Plan. For officers hired after December 8, 1986, the normal retirement date is the earlier of age 55 or age 50 and completion of 25 years in the Police Pension Plan.
Virginia Retirement System
Constitutional officers and their full-time employees must join the Virginia Retirement System (VRS). The city makes contributions on behalf of these employees. Under VRS, vested employees leaving the city have a choice of receiving a refund or leaving their contribution in the system until retirement.
Social Security System
The city participates in the Social Security System by matching the contributions all full- and part-time employees are required to make. The city contributes 6.2% of the employee's gross base salary for Old Age Survivors and Disability Insurance (OASDI), and another 1.45% of the worker's gross base salary for Medicare. This brings the city's total contribution to 7.65%, which matches the employee's 7.65% Federal Insurance Contributions Act (FICA) withholding.