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West Virginia bill criminalizes late pension fund payments

CHARLESTON — A bill making it a crime for employers failing to make required, timely payments to the West Virginia Consolidated Public Retirement Fund on behalf of its employees has moved in the House of Delegates.

House Bill 4449 passed through the Judiciary Committee at the state Capitol on Wednesday. It now heads to the House Finance Committee for approval before possible action on the House floor.

“We are attempting to receive the contributions that are due employees, in a timely manner,” Jeff Fleck, executive director of the West Virginia Consolidated Public Retirement Fund, explained to the committee. “We’ve had situations in the past where employers have not paid the contributions, both the employee and the employer contributions, for months on end.”

Employers have accumulated debts of as much as $500,000 in the past, Fleck said.

“We’ve had to enter into settlement agreements in situations like that,” Fleck added.

“The purpose is to get the funds in, so that they can be invested in a timely manner.”

More than 800 employers participate in the CPRB system. More than 500 are non-state employers, Fleck explained, such as county commissions and public service districts.

The CPRB administers nine plans: the Public Employees Retirement System; Teachers’ Retirement System; Teachers’ Defined Contribution System; the West Virginia State Police Death, Disability and Retirement Fund; the West Virginia State Police Retirement System; the Deputy Sheriff’s Retirement System; the Judges’ Retirement System; the Emergency Medical Services Retirement System; and the Municipal Police and Firefighters Retirement System.

The CPRB issues a past due notice to employers after being 30-days delinquent. Upon a 60-day delinquency, the state auditor and respective county sheriff’s department is authorized and directed to withhold any money due, with regular interest.

Money collected would be paid to the applicable retirement system on behalf of the public employer.

Regular interest is rated at 7.5 percent, Fleck told the committee.

Annual return on investments has helped retirement funds recently, Fleck said.

“This past fiscal year the Investment Management Board got back about 15.8 percent,” he said. “We assume over the long term we’ll receive 7.5 percent. That’s where we are, over a 20-year history.”

Delinquency fees of 7.5 percent are in place to make up for the losses of investment to make the fund whole, Fleck explained.

Further penalties would be in place to hold responsible parties accountable for non-payments, or late payments to CPRB.

Any public official who is responsible for ensuring that a public entity comply with provisions of a public pension plan administered by the CPRB, who knowingly and willfully fail to make employee or employer contributions to the retirement plan shall be guilty of larceny of the contributions owed, the bill states. If the amount is $1,000 or more, the public official would be guilty of a felony.

Those penalties against public officials gave Delegate Barbara Fleischauer, D- Monongalia, the minority chair, reason to oppose the bill.

“I understand it’s important that all employers pay their pension contributions, and that they pay them on time,” Fleischauer said. “And I think whatever is good for private employers should generally be good for public employers. But I think the idea that we potentially go after payroll clerks with a felony concerns me. I think it’s serious when we add criminal penalties.”

The bill passed with only two no votes Wednesday.

“I think this is a really good bill,” said Delegate Charlotte Lane, R-Kanawha. “It was requested by the Consolidate Public Retirement Board. It seems to me that since the CPRB is responsible for $15 billion worth of assets and it’s trying to ensure that all of our retirees are fully protected and that it has a mechanism to make sure those who aren’t forwarding the proper amount of money — it makes sense that we give (CPRB) the proper law to allow them to collect the money.”

Delegate Mark Zatezalo, R-Hancock echoed sentiments in favor of the bill.

“The CPRB) is going to be responsible for the retirement funds who have been contributed for,” said Zatezalo. “They’re going to have to pay the retirees regardless. I think it’s fair that everyone carry their weight and retirees have their contributions placed with the board because it becomes a burden on the rest of the people who make payments on time.”

“If history has taught us anything,” said Delegate Phil Isner, D-Randolph, “in numerous plans, particularly with some municipal fire and police plans, the municipalities have failed to make their payments. This (bill) will protect employees who plan to retire.”

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