District of Columbia Retirement Reform Act
Prior to the Reform Act in 1979, the retirement plans for the District of Columbia Police Officers, Firefighters, and Teachers were authorized by various acts of Congress and under the control of the Federal government.
Financing of retirement benefits was "pay-as-you-go", meaning benefits were paid from general revenues of the Federal government ("US Department of Treasury") when workers retired instead of being pre-funded throughout the careers of participating workers.
When the Reform Act required the District government to assume financial responsibility for these defined benefit pension plans, the large unfunded pension liability that had accumulated (approximately $2.6 billion) was also transferred to the District government, and continued to grow over the years. An unfunded liability results when funds set aside under an employer's pension plan are accumulating at a rate insufficient to provide the funds out of which the promised pensions can be paid when they become due.
In response to the transfer of the unfunded pension liability, in 1997 the Federal government proposed to provide financial relief to the District by having the Federal government assume financial responsibility for most of the current unfunded liability it created and transferred to the District almost twenty years earlier. The unfunded liability had grown from $2.6 billion in 1979 to approximately $4.9 billion in 1997.
Congress enacted Title XI of the Balanced Budget Act of 1997 (Public Law 105-33, 111 Stat. 251), entitled the "National Capital Revitalization and Self-Government Improvement Act of 1997" (the "Revitalization Act.") Under the Revitalization Act, the Federal government assumed financial responsibility for the unfunded pension liabilities for retirement benefits earned as of June 30, 1997.
The following year, the District government enacted the “Police Officers, Firefighters and Teachers Retirement Benefit Replacement Plan act of 1998” (the “Replacement Plan Act”), which established retirement plans for pension benefits accrued after June 30, 1997, for which the District is responsible for financing.
In 2004, the District’s “Office of Financial Operations and Systems Reorganization Act of 2004” transferred the responsibility for administering the retirement programs for the District’s police officers, firefighters and teachers to DCRB.
To view current legislative items affecting the District of Columbia Retirement Board (DCRB), please view the Current Legislation page.
In addition to DCRB's mission to manage and control the assets of the Funds, the Reform Act imposes stringent fiduciary obligations on Retirement Board members ("Trustees"), which include a requirement to exercise their responsibilities exclusively in the interests of the beneficiaries and participants with the care, skill, prudence, and diligence as would a prudent expert. A fiduciary who breaches any of the responsibilities, obligations, or duties imposed by the Reform Act are held personally liable and must restore to the Funds any losses that may occur from such breach.
In recognition of these and other uncompromising fiduciary obligations, the Reform Act provides the Retirement Board with a level of independence sufficient to permit Trustees to perform their duties efficiently and effectively. For example, the Reform Act authorizes the Retirement Board to promulgate rules and regulations, adopt resolutions, issue directives for the administration and transaction of its business, and to perform such functions as may be necessary to carry out its responsibilities [DC Code § 1-711(e)].
The Retirement Board is also granted specific authority to enter into contracts with public or private sector entities to the extent necessary to carry out its responsibilities [DC Code § 1-711(i)(1)]. Moreover, the Retirement Board is authorized to propose its own rules, which govern the procurement of goods and services pursuant to its authority to contract [DC Code § 1-711(i)(2)].
Board member fiduciary obligations include:
- Conflict of Interest Guidelines
- Financial Disclosure
Investment Management Agreements