As part of their September 15 meeting, the Senate Finance and Appropriations Committee received an investments and administrative overview presentation from Chief Investment Officer Ron Schmitz and Executive Director Patricia Bishop of the Virginia Retirement System (VRS). 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.
The Virginia Retirement System achieved a 1.4% return, net of fees, on its investment portfolio for fiscal year 2020. The trust fund ended the year with approximately $81.6 billion, which is a slight decrease from FY 2019 as the unfunded liabilities of the fund have risen over investment returns. However, total fund performance exceeded benchmarks. The portfolio included approximately $31.0 billion in public equity, $11.3 billion in credit strategies, $12.5 billion in fixed income, $11.2 billion in real assets, $10.2 billion in private equity, $1.2 billion in private investment partnerships and $2.4 billion in public strategies portfolio, as of June 30, 2020. The VRS total population comprises 742,143 members.
As previously reported, investment income is critical to ensuring that employer contributions meant to amortize long-term unfunded liabilities remain low. Lower investment returns can lead to increased employer contributions. Increases in employer contributions directly impact the budgets of local governments. VRS will review the status of the retirement plan for teachers in October and for local governments in November of this year in advance of the VRS Board of Directors certifying new employer contribution rates in 2021 for the next biennial budget cycle.
Lastly, the most recent edition of VRS Member News was released and can be read here. Among other content, this edition includes COVID-19 updates, revised plan handbooks, and financial literacy resources.
VACo Contact: Jeremy R. Bennett