In This Edition

1. Online MBPs to be Available in August
2. Working After Retirement: Counsel Employees on the Facts
3. Pick-Up Resolutions Due August 1
4. Update VRS on Your June New Hires by July 15
5. VRS Updates Website
6. 2010 Legislative Changes E-Course for Employers Now Available
7. Defined Contribution Plan Webinar to Review Impact of 2010 Legislation
8. Comparing ORP Plan 1 and 2
9. Modernization Update
10. Your Turn to Ask: Do the Plan Changes Apply to All Employees?

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Online MBPs to be Available in August

The 2010 Member Benefit Profiles (MBPs) will be available in August through myVRS. The MBP is your employees’ annual benefit statement based on information you reported to VRS as of June 30, 2010.

Beginning this year, VRS is no longer printing and shipping paper versions of the MPBs. Instead, we are asking employers to direct employees to myVRS to access their MBPs electronically. Employers have found that electronic distribution is easy to administer, saves paper and frees staff resources. Moreover, by using myVRS, your employees will be linked directly to plan information, education offerings, publications, forms and tools for retirement planning. They also will find helpful links to external sources such as the Social Security Administration and Internal Revenue Service websites. More information about the MBP will be available for members in the August issue of Member News.

New Feature for Members Eligible for the 457 Plan

This year’s MBP introduces a new “income analysis” feature for employees eligible to participate in the Commonwealth of Virginia 457 Deferred Compensation Plan. This feature provides a retirement income estimate of employees’ future VRS benefit, Social Security income and funds available for distribution from their Deferred Compensation Plan. The combination of these resources will allow employees to measure the gap between estimated retirement income and a target of 80 percent of pre-retirement income. The 80 percent target is often used by financial planners as a benchmark for maintaining a reasonable living standard at retirement.

How do I Look Up Employees’ MBPs?

From myVRS for Employers, you can view the MBP Detail Report showing employees in your employer code whose 2010 MPBs have been loaded into myVRS:

1. Log into myVRS for Employers.
2. Select the Employer Options tab. If you have access to more than one employer code, select the Choose Employer link from the left column. Enter your five-digit employer code and then select the Look Up button.
3. Select the Reports link from the left navigation and then “Annual MBP Detail Report” from the reports list.

From the MBP Detail Report, you also can print up to 50 MBPs at a time for employees who do not have access to a computer at work or home. Log into myVRS for Employers.

Encourage your employees to register for myVRS before August if they do not already have an online account. VRS has prepared a variety of myVRS member communications you can use to assist your employees.

Working After Retirement: Counsel Employees on the Facts

VRS recently set a record for the largest yearly increase in retirement applications. As of May 31, 2010, VRS had received 10,845 applications for service retirement, compared to 7,873 applications at the same time last year. That’s an increase of more than 37 percent.

Before employees retire, make sure they know the facts about working after retirement. Here are the key points:

• Retirees can work for any employer that does not participate in VRS and continue to receive their retirement benefits.
• Under some circumstances, retirement benefits will continue for retirees who return to non-covered employment with a VRS-participating employer.
• If employees return to non-covered employment with the same employer, they must have a bona fide break in service of at least one full calendar month after their retirement date over a period they normally would work. For teachers and faculty members, summer breaks do not count toward satisfying the break-in-service requirement. School divisions and political subdivisions are considered separate employers. However, the Commonwealth of Virginia, including all state agencies and public colleges and universities, is considered the same employer.
• Retirees who return to covered employment will become active members and their benefits will stop. If you hire a retiree in a covered position, submit the Request for Termination of Monthly Benefit (VRS-7) 32kb as soon as possible to prevent overpayment of the retirement benefit.
• The benefit for employees who retire again will be recalculated for the additional service they earn and any change in their average final compensation. Any cost-of-living adjustments (COLAs) they received during their previous retirement will not continue when they retire again. They will become eligible for the COLA effective July 1 of the second calendar year after their subsequent retirement, when provided.

Learn more about working after retirement.

Pick-Up Resolutions Due August 1

School divisions and political subdivisions recently received a Member Contribution Pick-Up Resolution packet in the mail. This resolution must be signed by June 30 and returned to VRS by August 1.

As required by the new plan design legislation 125kb, school divisions and political subdivisions that wish to pay some or all of the 5 percent member contribution for Plan 2 employees must submit a duly authorized resolution to VRS. On the resolution, VRS asks that you acknowledge one of the following:

• Your Plan 2 employees will pay the 5 percent member contribution. This option does not require action by your governing body. Please acknowledge this election on the resolution and return it to VRS.
• You will elect to pick up between 1 percent and 5 percent of the Plan 2 member contribution. This option requires action by your governing body. Please complete and submit a duly authorized resolution to VRS.

Send the signed resolution to Susan Keith, Employer Representative Program Manager, Virginia Retirement System, P.O. Box 2500, Richmond, VA 23218-2500.

You have the option to elect to pick up the full 5 percent member contribution on a phase-in schedule. You must submit a different resolution from the one you received in the mail. Contact your employer representative to receive this guide resolution or if you have a question about preparing and submitting the resolution.

The resolution is revocable on an annual basis. All subsequent resolutions will void any previous resolutions. School divisions electing to pick up some or all of the member contribution are encouraged to share the resolution with their local governing body for future budgetary planning purposes.

Alert to Payroll Officers

If your school division or political subdivision plans to pay a portion of the member contribution but is not able to have the resolution signed by June 30, you must deduct the 5 percent member contribution from your Plan 2 employee payroll for the month of July. It should be treated as a pre-tax salary reduction for payroll deduction purposes. Resolutions received after this date will not be retroactive to July 1. Resolutions become effective on or after the date the resolution is signed.

Optional Retirement Plan for School Superintendents

If you have adopted the Optional Retirement Plan for School Superintendents, you have the option to increase the employer contribution up to 8.9 percent and pick up some or all of the 5 percent employee contribution. You must submit a separate resolution for this election. Contact your employer representative to receive this guide resolution.

Update VRS on Your June New Hires by July 15

To ensure that covered employees who began working in June are placed correctly in VRS Plan 1, please submit the following information to VRS by July 15:

• A list of employees who started work in June but will be reported on your July payroll. If you are a state employer, include new part-time or full-time faculty.
• A list of employees who are currently serving a probationary period whom you will not report to VRS until after they complete this period. If you do not plan to submit an Error Adjustment Report (VRS-1501) 219kb by July 1 to report some of your employees’ probationary periods retroactively, do not include these employees in this list.

Provide each employee’s Social Security number, name, hire date, gender, date of birth, length of probationary period (if applicable) and any special coverage eligibility such as hazardous duty coverage. Also include the month you will begin reporting each listed employee to VRS.

Because of the confidential nature of this information, please submit a paper copy of this list to the Virginia Retirement System, Employer Reporting Unit, P.O. Box 2500, Richmond, VA, 23218-2500. Do not send employee information by e-mail. E-mail is not secure. If you do not have any June new hires, please send an acknowledgement to VRS by mail.

Questions? Call Sandy Gentry toll free at 1-888-VARETIR (1-888-827-3847), ext. 3134, or e-mail sgentry@varetire.org.

VRS Updates Website

VRS has updated the website to reflect plan design changes and assist Plan 1 and Plan 2 members in finding information that applies to their membership status. Changes include a revision to the main homepage to provide three distinct “gateways” for employers, members and retirees to their respective homepages. When members navigate to the member homepage, they will see clearly marked sections for Plan 1 and Plan 2 content and information.

Other enhancements include:

• A new myVRS menu, which has been added to the upper left of the page to provide easy access to myVRS anywhere on the site.
• Links to the Calculator & Estimator, forms and publications in the left navigation menu, which is found on every page of the site.
• Quick access to top forms and publications located next to the What’s New tab at the bottom of each homepage.

Because of these changes to the site, your bookmarks to certain forms, calculators, publications and benefits pages may no longer work. Please update these accordingly.

2010 Legislative Changes E-Course for Employers Available Soon

A new e-course, 2010 Legislative Changes for VRS Employers, will be available soon. This e-course reviews the VRS Plan 2 provisions effective July 1, including the impact of 2010 legislation on member contributions, retirement eligibility criteria, average final compensation, refunds, the purchase of prior service, cost of living adjustments and the Line of Duty Act. Look for it on the Employer Training page July 9.

Defined Contribution Plan Webinar to Review Impact of 2010 Legislation

Register for the following employer webinar to learn more about how legislation adopted by the 2010 Virginia General Assembly will affect the defined contribution plans. The webinar will include information on changes to eligibility for the standard catch-up and the impact of plan design changes on the optional retirement plans.

Defined Contribution Plans Webinar
July 23, 9:30-11 a.m.
Register

For more information on the impact of 2010 legislation on the defined contribution plans, read the July edition of the VRS Defined Contribution Plan Employer View.

Encourage your employees to attend a 457 Deferred Compensation Plan Regional Education Meeting 24kb in your area. Check the Resource Center for VRS Employers for information on the 457 plan as well as the optional retirement plans and the Virginia Supplemental Retirement Plan.

Comparing ORP Plan 1 and 2

The new plan provisions established by the General Assembly apply to the optional retirement plans (ORPs) administered or authorized by VRS as well as the VRS defined benefit plan. Go to ORP Plan 1 and Plan 2 comparison chart 124kb.

Hiring an ORP Employee

Employees who left covered employment but did not withdraw their funds and have service credit in VRS or an ORP account balance as of June 30, 2010 will be rehired under Plan 1 if they return to covered employment. If you are hiring an employee with service credit in VRS earned before June 30, 2010, ask the employee to provide a copy of his or her myVRS account summary page. If you are hiring an employee with an ORP account balance, ask for an account statement from the most recent quarter or a copy of an employment contract or acceptance of offer of employment dated before March 15, 2010. Attach this information to the applicable participant election form and submit it to VRS.

Employees who return to covered employment with no service credit in VRS or no ORP account balance will be rehired under Plan 2.

Modernization Update

Systems requirements

This summer, VRS will distribute information about system requirements for the Modernization program to your VRS Modernization liaison. This information will explain the new technology and processes for your organization to interact with VRS through its new system. The Modernization liaison may distribute these requirements internally to individuals who need the information. Information also will be posted under the Modernization tab.

Modernization Success Depends on Feedback

The success of the VRS Modernization Program depends on employers’ participation and input. In recent months, VRS has gathered feedback from a variety of employer contacts through in-person visits, phone surveys, webinar previews and focus groups. This feedback along with requests you made through earlier focus groups and surveys will help VRS create online benefit administration tools that will meet your needs today and in the future.

As the project progresses, there will be more opportunities for employers to provide feedback to VRS. If you want to volunteer for future feedback opportunities, please send your contact information to modernization@varetire.org.