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The West Virginia teachers' retirement system is in chaotic condition. A suit filed by participants against AIG VALIC is only the latest of the problems shaking the system and threatening its participants.
Part of the problem is confusion over the system's structure. In 1991, the West Virginia teachers' primary plan became a defined contribution plan, but then in 2005, emphasis was switched back to a defined benefit plan.
Now there are complications arising from a pending merger of the $908 million Teachers' Defined Contribution Plan into the $3.6 billion Teachers' Retirement Plan, the DB plan.
The repeated switching between DB and DC plans could cause participants to lose significant portions of their money, and cost taxpayers if they have to restore some funds. It has also been a distraction to the trustees of the system, whose governance deserves to be called into question.
The changing nature of the system might have opened the door to the type of fiduciary oversight problems alleged in the AIG VALIC case, and led to confusion among participants and trustees over making the best...