The Virginia Retirement System (VRS) announced on August 12 that its investment portfolio earned a 12.1 percent return, net of fees, for fiscal year 2026, significantly exceeding the system’s long-term actuarial assumed rate of return of 6.75 percent.
The strong investment performance for the fiscal year ending June 30, 2026, increased the VRS trust fund to a record market value of $135.2 billion. According to VRS, the results reflect the diversification of the system’s investment portfolio and further strengthen the fund’s ability to meet its long-term obligations to current and future retirees.
The results are particularly important for Virginia counties and other VRS-participating employers. Investment earnings are a major component of pension funding, alongside contributions from employees and employers. When investment performance exceeds actuarial assumptions, it strengthens the financial position of the retirement system and can help support greater stability in employer contribution rates over the long term. Conversely, sustained investment returns below the assumed rate can place upward pressure on future contribution requirements.
VRS emphasized that the FY 2026 results should be viewed in the context of the system’s long-term investment strategy. Pension obligations extend over decades, and contribution rates are determined through actuarial valuations that account for investment experience and other demographic and economic assumptions over time. Accordingly, a single year of strong investment performance does not immediately translate into lower employer rates, but it provides a positive contribution toward the system’s long-term funded status and sustainability.
VRS credited Chief Investment Officer Andrew Junkin and the VRS Investments Department for the year’s performance. The agency noted that the results demonstrate the benefits of maintaining a diversified portfolio while continuing to focus on the long-term commitments of the trust fund.
For counties, maintaining a well-funded and financially stable VRS is important both for providing retirement security to public employees and for supporting predictable local budgeting. Employer contribution rates represent a significant personnel cost for local governments, and rate stability helps counties plan for these obligations within multi-year financial forecasts and annual budgets.
VACo will continue to monitor VRS investment performance, actuarial valuations, and future employer contribution rates for their potential impacts on county budgets.
VACo Contact: Jeremy R. Bennett