The purpose of this memo is to provide background and a review of the investment benchmarks used by the Virginia Retirement System (VRS) and Virginia529. During JLARC staff updates on VRS in recent years, members have asked questions related to VRS’s investment benchmarks, including how the benchmarks are determined and how VRS investment performance compares to other public pension plans. In response to these questions, JLARC staff undertook a review of the investment benchmarks used by both VRS and Virginia529. Both agencies were included in the review because JLARC has oversight of both agencies. The review primarily focuses on the funds supporting their defined benefit plans, which are the VRS trust fund and the Defined Benefit 529 (DB529) fund, and provides information on

• the purpose of investment benchmarks and descriptions of the benchmarks used by VRS and Virginia529;

• the processes VRS and Virginia529 use to review and approve benchmarks;

• VRS and Virginia529 investment performance relative to their benchmarks; and

• how VRS and Virginia529 compare to other public pension plans and defined benefit college savings plans, respectively, in their investment performance and the processes they use to review and approve their benchmarks.