RD327 - VRS (Virginia Retirement System) Oversight Report - July 2015


Executive Summary:
The Virginia Retirement System (VRS) administers retirement plans for employees of state and local governments. The two largest plans are the Teachers Plan and the State Employees Plan. Other plans include those for state police officers (SPORS), other Virginia state law officers (VaLORS), judges (JRS), and individual retirement plans for 585 local political subdivisions. In addition to retirement plans, VRS administers several other benefit programs. These include life insurance, sickness and disability programs, and other post-employment benefit programs, such as the retiree health insurance credit program.

Overall, VRS serves approximately 660,000 members, retirees, and beneficiaries. Active members include current state and local employees and teachers in Virginia’s public school divisions. Others served by VRS include retirees, their designated beneficiaries, and deferred members who are not actively employed and are not collecting benefits.

The financial assets used to pay VRS benefits are pooled in the VRS trust fund. The fund held $67.8 billion in assets as of March 31, 2015. Based on the value of these assets, the retirement system ranks as the nation’s 22nd largest public or private pension fund. In FY 2014, VRS paid $3.9 billion in retirement benefits and $0.3 billion in other post-employment benefits.

VRS receives funds from three sources: employer contributions, member contributions, and investment income. In FY 2014, after accounting for expenses, VRS received net additions of $7.8 billion to the trust fund.

Investment income is critical to the health of the VRS trust fund, accounting for three-fourths of total additions in FY 2014. VRS investments provided a return of 8.1 percent for the one-year period ending March 31, 2015. The total return over the past 10 years was 6.9 percent, which is slightly below the seven percent long-term rate of return that has been assumed by VRS for its investments.