Virginia Retirement System Overview and Structure

The Virginia Retirement System is a public pension system that provides retirement benefits to eligible state and local government employees in Virginia. It's a vital part of the state's overall retirement plan.

The system is overseen by the Virginia Retirement System Board, which is responsible for managing the system's assets and making decisions about benefit payments. The Board is composed of 11 members, including state officials and local government representatives.

The VRS offers a range of benefits to its members, including a defined benefit plan, a defined contribution plan, and a hybrid plan. The defined benefit plan is the most common type of plan, and it provides a guaranteed benefit payment to eligible members based on their salary and years of service.

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You're eligible for the Virginia Retirement System if you hold a full-time position, and you'll be automatically enrolled.

In fact, employees with full-time positions are automatically enrolled in VRS, so you don't need to do anything.

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To be eligible for an unreduced retirement benefit, you'll need to meet certain requirements, which vary depending on the plan you're in.

If you're in Plan 1, you're eligible for an unreduced retirement benefit at age 65 with at least five years of service, or as early as age 50 with at least 30 years of service.

For Plan 2, eligibility for an unreduced retirement benefit is based on your normal Social Security retirement age and at least 5 years of service, or when your age plus years of service equal 90.

In the Hybrid Plan, eligibility for an unreduced benefit is similar to Plan 2, but there are specific rules for the defined contribution component.

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The cost of participating in the Virginia Retirement System is a shared responsibility between the City and employees. The City pays 20.96% of base pay towards VRS benefits.

This means that employees also contribute a portion of their income towards their retirement benefits. Employees pay 5% of their base pay towards VRS benefits.

Overall, the cost of participating in the Virginia Retirement System is a collaborative effort between the City and its employees.

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The cost of VRS benefits is shared between the City and employees. The City pays 20.96% of base pay towards these benefits.

Employees also contribute to VRS benefits, paying 5% of their base pay towards them.

NASRA, the National Association of State Retirement Administrators, updates six key briefs annually on public pension management.

One of these briefs focuses on employee contributions to public pensions, a crucial practice for stable pension funding. Unlike private sector pensions, state and local government employees contribute to their retirement benefits.

Employee contributions have become more important since the 2008 financial downturn, when many plans increased these contributions. This was done to ensure pension sustainability.

NASRA's brief examines the design, policies, and trends of contribution plans, highlighting their importance in pension funding.

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Most employees hired into the Virginia Retirement System since 1/1/14 participate in a hybrid, DB-DC plan.

Public safety officers and judges, however, participate in defined benefit plans.

Your contributions are placed into your member contribution account, which accrues 4% interest, compounded annually.

In Plan 1 or Plan 2, you contribute 5% of your salary each month, while in the Hybrid Plan, 4% of your salary each month is placed in your member contribution account.

Your school division makes a separate contribution to VRS based on payroll for all covered employees, which is invested to provide your future retirement benefits.

In the Hybrid Plan, 1% of your salary each month, along with your school division's mandatory 1% contribution, goes into your defined contribution account.

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Most employees hired into the VRS since 1/1/14 participate in a hybrid, DB-DC plan.

The hybrid plan combines a defined benefit (DB) plan with a defined contribution (DC) plan, offering a more flexible retirement option.

In the hybrid plan, 4% of your salary each month is placed in your member contribution account, which accrues 4% interest, compounded annually.

Public safety officers and judges, on the other hand, participate in defined benefit plans, which provide a guaranteed benefit amount based on their salary and years of service.

Your school division makes a separate contribution to VRS based on payroll for all covered employees, which is invested to provide your future retirement benefits.

In the hybrid plan, 1% of your salary each month, along with your school division's mandatory 1% contribution, goes into your defined contribution account.

You may also make additional voluntary contributions (up to 4% of your salary) to your defined contribution account, and your school division will then make matching contributions (up to 2.5%).

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The VRS (Voluntary Retirement Savings) plan is a great way to save for your future, but it's essential to understand when your service becomes effective. This is crucial for calculating your benefits and making informed decisions.

If you're hired on or before the first business day of the month, your VRS service will be effective on the 1st of the month you were hired. Business days, by the way, exclude Saturdays, Sundays, and banking holidays.

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The key date to remember is the first business day of the month. If you're hired after this day, your VRS service will be effective on the 1st of the following month you were hired.

To help you keep track, here's a quick summary:

The Virginia Retirement System offers a range of investment options to help your retirement savings grow. The system has a diversified portfolio with over 100 investment options, including stocks, bonds, and real estate.

The VRS Board of Trustees is responsible for overseeing the investment process, ensuring that the system's assets are invested wisely. They have a strong track record of prudent investment decisions, with the system's assets growing significantly over the years.

The system's assets are valued at over $80 billion, providing a solid foundation for future returns.

Investments can be a great way to grow your wealth over time.

A key aspect of investing is understanding the different types of investments available, such as stocks, bonds, and real estate.

Stocks, for example, represent ownership in a company and can be a good option for those looking to invest in the stock market.

Bonds, on the other hand, represent debt and can provide a regular income stream.

Real estate investments can provide a steady income through rental properties or long-term appreciation in property value.

It's essential to have a clear investment strategy and goals in mind before investing.

A well-diversified portfolio can help minimize risk and maximize returns.

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Assets can be categorized into different types, including real estate, stocks, bonds, and commodities.

Real estate investments can provide a steady income stream through rental properties.

Investing in stocks can be a good way to grow your wealth over time, but it also comes with higher risks.

Bonds offer a relatively lower-risk investment option with fixed returns, making them a popular choice for conservative investors.

Commodities such as gold and silver can be used as a hedge against inflation and market volatility.

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The Virginia Retirement System offers several benefits to its members, including a defined benefit plan, which provides a guaranteed monthly benefit amount based on your salary and years of service.

You can retire with full benefits at age 62, but your benefit amount will be reduced if you retire earlier.

The system also offers a disability retirement option, which allows you to receive a full benefit amount if you become disabled.

If you leave the system before retirement, you may be eligible for a refund of your contributions, minus any administrative fees.

The refund amount will depend on how long you've been a member of the system.

You can also transfer your contributions to a different retirement plan, such as an IRA or 403(b) plan.

The transfer process typically takes a few weeks to complete.

The Virginia Retirement System also offers a survivor benefit option, which provides a monthly benefit to your spouse or other beneficiaries if you pass away.

The benefit amount will depend on your benefit amount at the time of your death.

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The Virginia Retirement System is guided by a clear governance framework. The Virginia Code Title 51.1 sets the standard for the board's investment decisions, requiring them to act with care, skill, prudence, and diligence.

The board's fiduciary duty is to act in the best interest of the beneficiaries, which means they must consider the long-term implications of their decisions. This duty is outlined in the Virginia Code Title 51.1.

The board is made up of nine members, as established by Virginia Code Title 51.1. This structure is designed to provide a diverse range of perspectives and expertise.

The board is responsible for diversifying investments to minimize the risk of large losses, unless it's clearly prudent not to do so. This means they must carefully consider the potential risks and rewards of each investment.

The board's investment decisions are guided by the principle of acting like a prudent person in a similar position. This means they must consider the specific circumstances and make decisions that are in the best interest of the beneficiaries.

The Virginia Retirement System is divided into multiple political subdivisions, each with its own unique characteristics. The system includes 134 localities, which are grouped into 38 counties and 96 cities.

These localities have different retirement systems, with 32 of them participating in the Virginia Retirement System. The remaining 102 localities have their own separate retirement systems.

The system also includes 4 special districts, which are independent and have their own retirement systems. These districts are the Arlington County Water Authority, the Fairfax County Water Authority, the Loudoun County Water Authority, and the Northern Virginia Transportation Commission.

The system's structure allows for flexibility and adaptability, ensuring that each locality's unique needs are met.

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