At the November 13 meeting of the VRS Board of Trustees, the Board approved FY 2027-2028 employer contribution rates for participating political subdivisions. Gabriel, Roeder, Smith & Company (GRS), the VRS plan actuary, highlighted factors that influenced contribution rates, based on data from the June 30, 2025 valuations. As previously reported, odd year valuations determine employer contributions for the coming biennium.
The employer contribution rates are for the 602 participating political subdivisions, health insurance credit (JIC) for participating political subdivisions, Virginia Local Disability Program (VLDP), and Line of Duty Act (LODA) Fund. Employer contribution rates provided for non-professional school board and political subdivision plans, including VLDP and the health insurance credit for political subdivisions, are final once certified by the VRS board.
In mid- to late January, political subdivision employers will be able to download their actuarial valuations and rate letters from myVRS Navigator.
Overall, the number of active participants in political subdivision plans increased 3.9% from the prior year, as did the number of retirees (3.3%). The average salary of political subdivision employees increased 4.4%. Inflation remained elevated this past year, resulting in higher-than-expected cost-of-living rates. The annualized return on the VRS trust fund portfolio was 9.9% as of June 30, 2025, surpassing the actuarially assumed rate of return of 6.75%. Investment gains are phased in gradually over time to help keep contribution rates level. Overall, political subdivision pension plans are well-funded. The aggregate funded status for local plans stood at 92% as of June 30, 2025. More than three-quarters of political subdivision plans (455 employers total) are at least 90% funded.
Political subdivision plans contribution rates are calculated based on the assets and liabilities of each individual participating employer, the benefit offerings (enhanced hazardous duty coverage, for example), the demographics of the covered employees and the current funded level of that employer’s plan.
Overall, the average defined benefit rate paid by political subdivision employers will decrease slightly in FY 2026-2027, compared to the previous biennium. The average actuarially determined employer defined benefit rate for employers that don’t offer enhanced hazardous duty benefits is 4.98%. The average defined benefit rate for employers that offer enhanced hazardous duty benefits is 12.32%
The funded status of the VDLP for teachers and political subdivisions remains strong. Political subdivisions that offer the health insurance credit saw steady increases in funding as well. The VLDP contribution rate will increase slightly in FY 2027-2028. For the political subdivisions that offer it, the HIC rate will be slightly lower in FY 2027-2028.
Pending approval from the General Assembly, LODA Fund-participating employers will pay $1,385 per full-time employees, an increase from $1,015 this fiscal year. As required by law, LODA benefits are funded on a “pay-as-you-go” basis, covering the health care premiums for current beneficiaries as well projected costs of any new claims. Because contribution rates are not pre-funded, participating employers should expect to see annual increases.
The LODA rate increase this year can be attributed to: higher healthcare costs, modification of employer weightings for certain covered groups, including part-time, volunteers and National Guard members, which led to a decrease in full-time equivalent participants, and an increasing number of beneficiaries.
Next quarter, VRS will send actuarial reports to each VRS-participating employer that will include the retirement plan contribution rate, along with rates for the health insurance credit, if applicable. You can view the actuary’s presentation to the board for additional information.
More information the VRS Board of Trustees and the November 13 meeting may be viewed here and here respectively.
Also, effective July 1, 2026, legislation (Acts of Assembly, Chapter 190) changes how disability coverage is provided to emergency dispatchers at public safety answering points (PSAPs). All eligible dispatchers employed by participating political subdivisions will move to the Virginia Local Disability Program (VLDP) or an employer’s comparable program, unless they opt out, which can be done between February 1 and March 31.
Dispatchers employed on June 30 and July 1, 2025, have a one-time opportunity to opt out and remain in disability retirement. VRS will provide opt-out forms to employers in early 2026. Forms must be completed by employees and returned to by March 31, 2026, then certified and sent to VRS promptly. Employees who take no action will automatically move to VLDP on July 1, 2026. This decision is irrevocable.
Dispatchers hired on or after July 1, 2025, will move to VLDP or a comparable program on July 1, 2026, and cannot opt out. Employers should counsel these employees about the change. Employers should encourage employees to update contact information in myVRS to ensure timely communication and prepare to administer the opt-out process and certify forms.
VRS will be conducting a webinar, on January 21 at 2 p.m. This session will help clarify employer responsibilities related to administering the opt-out period and offer practical guidance for implementation and counseling. Employers may also wish to review a recorded version of a September webinar. The VLDP for Emergency Dispatchers webpage includes legislation details, a side-by-side comparison of disability retirement and VLDP, and employer guidance. Additional questions on this topic may be sent to DispatcherVLDP@varetire.org.
VACo Contact: Jeremy R. Bennett