As part of their July 6 meeting, the Joint Legislative Audit and Review Commission (JLARC) presented an oversight report of the Virginia Retirement System (VRS) as required by the Code of Virginia. The health and well-being of VRS is important to local governments as it administers retirement programs and other benefit programs for state and local government employees, including teachers. VRS receives funds from employer contributions, employee contributions, and investment income.
While information on returns is still being finalized, VRS reported exceptionally good news that as of March 2021, the annual return was 28.3 percent, and the total VRS Trust fund grew by $19.5 billion to exceed a historic high of $100 billion in assets. The Trust fund exceeded benchmarks for all periods and the fund continues to benefit from improved market conditions. This could be one of the strongest fiscal years ever reported for VRS.
Meeting or exceeding VRS investment benchmarks is critical to ensuring that employer contributions meant to amortize long-term unfunded liabilities remain low. As previously reported, recent actuarial assumption changes, especially pertaining to mortality, could have negatively impacted employer contribution rates by necessitating increases for the next biennium. However, the substantial returns on revenue will likely negate these increased liabilities and contribute to keeping employer contribution rates steady.
VRS serves more than 772,000 total members, retirees, and beneficiaries and has 597 participating local political subdivisions. Based on assets, VRS is the 18th largest public and private pension systems in the United States, and 41st largest in the world. In 2020, VRS paid out $5.3 billion in benefits. Around 86 percent of VRS retires remain in Virginia. The two largest VRS pension asset areas are the Teachers plans and the Political Subdivision Employees plans, both by assets and number of members.
VACo Contact: Jeremy R. Bennett