The Virginia Retirement System’s (VRS) leadership provided their annual update to the Joint Legislative Audit and Review Commission (JLARC) on July 14 and reported an estimated return of 15.7 percent for FY 2014. This puts VRS total assets at $66.1 billion at the close of the fiscal year.
VRS thanked the General Assembly members for keeping on track with the pension reform commitments made in 2012 which put the state on a schedule to fully fund the board certified actuary rate necessary to meet future commitments.
This year the General Assembly moved up the contribution rate for the state and teacher plans to about 80 percent of the rate recommended by the VRS actuary for the biennium. This rate increase cost the state an additional $315 million, but also raised costs for localities as the local share of teacher pension costs went up as well.
The rates will continue to increase in each biennium through 2018-2020 when the plans begin to be funded at 100 percent of the board certified rate. The unfunded liability for the local and teacher plans will be shown on the financial statements of localities produced at the end of the current fiscal year. Counties remain concerned about the state allowing 100 percent of the unfunded liability for the teacher plan to be apportioned among those localities with school divisions.
VRS noted that the Hybrid Plan for new employees rolled out smoothly on January 1, 2014 and in the long run will help stabilize employer contribution rates at the state and local level.
VRS also stated that the board is no longer looking into the potential for offering its services to manage the assets of other public bodies in Virginia.
This research initiative of VRS, called Project Frontier, found interest among other public bodies but also found that marketing and staff efforts required to launch this type of initiative would be too time consuming and costly.