After seven years of litigation, the Consolidated Public Retirement Board has settled its part of a class-action lawsuit by public school employees who contend they were misled into investing in a low-earning retirement savings plan in the 1990s.
Jeffrey Fleck, the retirement board's executive director, told board members of the settlement Wednesday.
"We basically bought our piece to get out," board Chairman David Wyatt said of the settlement, approved in Kanawha Circuit Court on Oct. 29.
The class-action suit contends that thousands of teachers and public school employees were misled into investing in low-interest rate annuities when the Legislature set up the option of a Teachers Defined Contribution retirement plan, beginning in 1991.
The TDC plans performed so poorly that in 2008, the Legislature created a window allowing participants to return to the Teachers Retirement System, a defined benefits plan, but with a buy-in provision that cost school employees thousands of dollars each.
The suit against CPRB contended that it had failed to meet its fiduciary responsibility "to choose appropriate and honest financial service providers."
As part of the settlement, CPRB agreed to pay $5,000 and expenses to the plaintiffs, Fleck said.
The lawsuit continues against the original defendants, including VALIC, the company that promoted the TDC plans, and about 30 company agents. VALIC is now part of AIG.
Also during the CPRB meeting Wednesday:
n Craig Slaughter, the state Investment Management Board's executive director, said state pension fund investments were down 5.4 percent for the first quarter of the 2015-16 fiscal year, but had recovered most of those losses in October.
"You probably aren't surprised by that if you read the papers," he said of the losses. "August and September were really bad months."
Slaughter said both international and domestic markets came back strong in October.
"Our estimates are that we've gotten almost all of that back," he said of the prior months' losses.
n Fleck said he updated legislators during October interim meetings on the status of a pending Internal Revenue Service regulation to define "normal retirement age" as 62 years or older.
First proposed by the IRS in 2007, implementation of the definition has been postponed several times, and Fleck said the earliest it could go into effect in West Virginia would be April 2017.
"It has created some concern over the last few years," Fleck said. The IRS rule stands to overturn the "Rule of 80" in state retirement law, which allows state and public school employees to retire as young as age 55, if their age and years of service equal or exceed 80.
Reach Phil Kabler at philk@wvgazettemail.com, 304-348-1220, or follow @PhilKabler on Twitter.