From 9% to 90%: How West Virginia Saved Its Pensions and Rewrote Retirement Rules

Jeffrey Fleck, Executive Director of the West Virginia Consolidated Public Retirement Board discusses how West Virginia transformed its public pension landscape. In this conversation you’ll hear the history behind closing the Defined Contribution (DC) plan in 1991, reopening the Defined Benefit (DB) plan in 2005, and the large-scale transfer of members back to DB — a move that helped lower costs and improve funding. Learn how the DB plan’s funded status climbed from roughly 9% to about 90% today, with a plan to eliminate unfunded liabilities by 2034–2035. Jeffrey also explains how a compact team of ~100 staff administers 10 retirement plans for ~160,000 participants, their goal to process retirements within 30 days, and early, cautious uses of AI (call center and OCR) to improve operations. Plus: milestones the board is celebrating this year, including the director’s 15-year tenure and the agency’s 35th anniversary.

<pre><code> **Jeffrey Snyder, Broadcast Retirement Network** </code></pre>

Joining me now is Jeffrey Fleck. He's the executive director of the West Virginia Consolidated Public Retirement Board. Jeff, it's always great to see you.

Thanks for joining us on the program this morning.

Jeffrey Fleck, West Virginia Consolidated Public Retirement Board

Good to see you, Jeff. Thanks for having me on. Appreciate it.

Jeffrey Snyder, Broadcast Retirement Network

I certainly appreciate your time and very respectful of your time. So I just want to kind of jump in. There's a lot going on in West Virginia as there is across the 50 states here in the United States.

Let's start off with what I think is kind of groundbreaking news, but maybe you might feel a little bit differently. Let's talk about the closure of the D.C. plan, the Defined Contribution Plan. Let's start there.

You guys took some big steps in West Virginia.

Jeffrey Fleck, West Virginia Consolidated Public Retirement Board

<pre><code> Yeah, we did, and it's actually been quite a while ago. The legislature in West Virginia created the D.C. plan in 1991, and they closed the D.B. plan. So we were one of the first to do that, I believe. It was more of a trend after the 2000s to close D.B. plans and open D.C. plans or hybrid plans, and we did that in 91. So the D.C. plan was in effect from 1991 until 2005, and I guess the average balance in the D.C., and this was for teachers in West Virginia, the average balance was less than $40,000, and the legislature looked at it, and they decided to close the D.C. plan in 2005, reopen the D.B. plan, and so we went back to the D.B., and in 2008, the legislature also gave the opportunity for the 20,000 participants in the D.C. plan to give them the option to transfer to the D.B. plan, and about 15,000 of those participants decided to do that. So we still have some participants that are in the D.C. plan, but the majority are in the D.B. plan, and just to give a little history, in the early 90s, and this was the whole reason they decided to create the D.C. plan, the D.B. plan for teachers in 1991 was 9% funded, worst funded plan in the country, and so that's when they decided to create the D.C. plan. So they closed the D.B. plan in 91. You had no new members coming in to help pay off that unfunded liability, and that's another reason they decided to close the D.C. plan, and a lot of it has to do with the plan design of that D.C. plan, because when the legislature looked at it, the employer contribution was 7.5%. When we looked at the normal cost of the D.B. plan, it was between 4.5% and 5%. So it actually saved the state money to reopen the D.B. plan for West Virginia, and then we had an influx of money coming back in to help pay that unfunded liability. Very happy to say now, and there was a 40-year plan put in place, amortization plan for the D.B. plan. It's scheduled to be fully paid for the unfunded liability in 2034, but I was just talking to our actuary. We don't, of course, don't have the final numbers for this fiscal year. We've got a few weeks left, but looking at it, it looks like we may be around 90% funded now in the D.B. plan. So going from 9% funded to 90% funded with a plan in place to be fully funded by 2034, and it's really a success story here in West Virginia, and I know it can't, it's, every situation's different, and some might not be able to do that. I know there have been other states that have looked at closing D.C. plans and reopening D.B. plans, but in West Virginia, it's been a great success, and it's, you know, everything is going great. Now, the markets have been good, so that's been very helpful, and hopefully we'll continue to see that success. **Jeffrey Snyder, Broadcast Retirement Network** </code></pre>

Yeah, well, yeah, well, congratulations on that, and, you know, you look, you're leading, you kind of led a, as you said, are leading a trend. I want to get the, you know, you serve the membership, the teachers, you know, public employees. I would imagine the feedback was very positive, right, that the D.B. plan, look, if I had my, I'm in the private sector, but if I had my druthers as a young man, I would have preferred to be in a D.B. plan because that's something that you can count on, you can count on the retirement income, so I have to think that the, that when you're attracting new employees to the state in those different areas, that that is a really an attractive benefit.

Jeffrey Fleck, West Virginia Consolidated Public Retirement Board

It is an attractive method because, you know, there are very few places to get a D.B. nowadays, and pretty much the government sector is it, and trades, the trades, yeah, yes, yes, then the trades, and so it does help with recruiting, and it was interesting because when the legislature allowed those D.C. members to transfer, it was a one-time thing, and still to this day, 20 years later, almost 20 years later, the legislature still gets requests from those, there are now about 4,000 members left in the D.C. plan, a request to reopen that window to transfer, but the legislative, the longer it goes, the more expensive it is, and so the legislature has not opened up another window for that, so I think you have some of those that stayed in the D.C. plan that regret that decision, but I've talked to some D.C. plan members who are glad they stayed where they are, and so everybody's situation is different.

<pre><code>**Jeffrey Snyder, Broadcast Retirement Network** </code></pre>

That's right, it's all about personalization, we're all unique, we all have our own needs, we have families, we're different ages, we have different circumstances. Jeff, I wanted to take a step back because I think, you know, I've been in the retirement industry for a long time, 30 some odd years, you've been in the retirement industry for a long time, there's a lot that goes on behind the scenes at the, in state government with respect to managing the pension, it's not all hire an actuary and manage the investments, there's a group of people that work with you, you've got a pretty deep team, let's talk a little about the staff and the people that do the work behind the scenes, there's a lot of them.

Jeffrey Fleck, West Virginia Consolidated Public Retirement Board

Yeah, yeah, there are, and I always, every chance I get, especially here in the state, I'm very proud of the staff we have and I feel like we are considered a state agency, even though we're a board, but I'm very proud of our agency and feel like we're one of the best in the state. If you look at our total participants, actives, retirees, inactives, we've got about 160,000 participants and the state of West Virginia only has 1.8 million people and so we're dealing with almost 10 percent of the population of West Virginia and handling their retirement and we do that with 100 people and so our staff stays very busy, especially this time of year for teachers because July 1st is usually the big retirement date for teachers, usually about one-third of our total retirements take place on July 1st, so our team's very busy right now processing those July 1st retirements, getting them started, but we, a few years back in 2017, we implemented a new pension administration system and at the same time we did that, we restructured our agency and our organization to break it down by, we have an employer reporting section because we have over 800 employers, it's not just the state, we have, you know, communities, we have towns, municipalities, counties, there are over 800 employers that participate in our retirement plans, so, and we administer 10 different retirement plans. Our two largest, of course, are the teachers and the public employees, but we also do state police, we do judges, we do the municipal police and fire, various ones, so we have 800 employers, so we've got our employer reporting section, we have our membership section, which deals with the active employees, and then we have our retirement section, which deals with the retirees and they process the retirements that we do every year, so it's, at this point, we've been with that reorganization for about 10 years now and have some very long-tenured employees and I feel like it's a pretty well-oiled machine right now as far as getting those retirements out, and when we implemented our pension administration system, one of the main goals was to process retirements in a more timely manner. It was taking us a couple months, our goal was to get them done within 30 days of us receiving all the documentation, and we typically do that, and so it's, things are going well here in West Virginia and a lot of that is attributable to our staff.

<pre><code>**Jeffrey Snyder, Broadcast Retirement Network** </code></pre>

Yeah, good people, you know, there are a lot of people behind the scenes of these big pension systems that do a lot of the work, interact with the membership, education, communication, administration to, you

Jeffrey Fleck, West Virginia Consolidated Public Retirement Board

know, we're keeping files because when somebody applies for retirement, we need to make sure that everything is correct so that there doesn't need to be any corrections afterwards, so, and we also have an internal auditor that works very closely to make sure that we're working as efficiently and in line with state and federal code, which is constantly changing, and so.

Jeffrey Snyder, Broadcast Retirement Network

A lot of work. I wanted to ask you, you mentioned the change to the new pension administration system. In the world that we live in now with artificial intelligence basically everywhere.

You can't turn on the TV or read a news article, listen to a podcast without AI, somewhere coming up in the conversation. How are you and the team thinking about some of these newer technologies and deploying them? I would imagine that when you talk to your chief technology officer or chief information officer, he or she, they're thinking about these types of things and how to incorporate them.

<pre><code>**Jeffrey Fleck, West Virginia Consolidated Public Retirement Board** </code></pre>

Yes. And our chief information officer just came back from a conference, the PRISM conference, which is the Public Retirement Information Systems Management group. And AI was a huge part of the discussion there.

We've taken, we're taking a cautious approach. You know, I've heard horror stories, because it is only as good as the information that's there. That's the old garbage in, garbage out.

So if the information is not correct and the AI system that we would use would give incorrect information, we don't want that to happen. So we're looking at dipping our toe in the water and taking a cautious approach. But our chief information officer came back from the PRISM conference with a lot of good ideas.

Our board is very interested in implementing AI and what we do. And, you know, one of the first areas that we're thinking of maybe putting some AI features into is our call center. Because, you know, we receive over 5,000 calls a month and using AI to help with that process, we feel like might be a good place to start with our organization.

<pre><code>**Jeffrey Snyder, Broadcast Retirement Network** </code></pre>

And that's probably analogous to, if you think about the record keepers, that service, the retirement industry, the defined contribution, I think that's where they're deploying it. The other place might be helping out with processing or taking a first pass at processing. I don't know.

You know, when I came into the retirement industry, there were barcodes, barcoded forms. I think the world's changed. Now there's OCR and the ability to digitally read these forms.

But maybe that's another area that might be considered. Let me, as we close out our discussion, Jeff, what are some of the major milestones that you're looking at throughout the rest of the year? I hear it is June, you know, we're halfway through the year.

You mentioned the fiscal year. What are some of the major milestones for the West Virginia Public Consolidated Retirement Board?

Jeffrey Fleck, West Virginia Consolidated Public Retirement Board

<pre><code>Well, continuing to process those retirements in a timely manner and meeting that 30-day goal. Something that we're very proud of with our public employees retirement system is when legislature put the plan in place, the amortization plan, the teacher's retirement system was scheduled to be fully funded in 2034. Public employees was scheduled to be fully funded in 2035. </code></pre>

This year, we're gonna be saying that the public employees plan is over 100% funded. So for the first time ever. And so that's a huge milestone for us.

And one of our two large plans, and then the teacher's plan being at 90% funded. We're looking at our returns for this fiscal year. We have an assumed rate of return for our DV plans of seven and a quarter.

It looks like, you know, there's still three weeks to go in the fiscal year and anything can happen, but it looks like we may end up with an 11 or 12% return this year. And that helps tremendously with the funding of the plans. And so, and on a personal note, I will reach my 15th year here as the director.

<pre><code>I've been with the agency for 20. I started out as the compliance officer here at the retirement board, but this I will reach 15 years as the director this year and am the longest tenured director that the Consolidated Public Retirement Board has had. So a lot going on. </code></pre>

And also as an agency, we were created in 1991. And prior to that, there were separate boards for all the different plans. And as our name implies, we're the Consolidated Public Retirement Board.

So we have 10 different plans that we administer, but this will be our 35th anniversary. So we're actually promoting something in conjunction with the country's 250th birthday, kind of, we refer to ourselves as CPRB. It's a lot less of a mouthful than saying the whole thing, but CPRB's