In This Edition

1. VRS Experiences 19.1 Percent Return for 2011
2. Employer Contribution Rates: How Are They Determined?
3. Encourage Employees to View Their 2011 MBPs
4. Purchase of Prior Service Reminders
5. September is Life Insurance Awareness Month
6. Member News Now Available to Employees by Subscription
7. Modernization Update
   1. VRS to Collect New Data in Preparation for Modernization
   2. Next Sneak Peek to Cover Purchase of Prior Service
8. Your Turn to Ask: Can employees take money out of their retirement accounts while still employed?

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VRS Experiences 19.1 Percent Return for 2011

VRS experienced a 19.1 percent return (net return) on its investment portfolio for fiscal year 2011, ending the year with $54.5 billion in assets.

“We are pleased with last year's results, especially in light of steps taken in recent years to better diversify the fund. On a risk-adjusted basis, last year's performance was outstanding,” said VRS Chief Investment Officer Charles W. Grant.

Read more about VRS’ investment returns.

View VRS’ Performance Summary as of June 30 119kb.

Employer Contribution Rates: How Are They Determined?

VRS Plan 1 and Plan 2 benefit payments are funded by contributions from members and employers and the investment income earned on these contributions. Each employer makes a monthly payment, or contribution, to VRS to fund the retirement benefit for all its employees. The monthly payment consists of member and employer contributions:

• As provided in the Code of Virginia, the member contribution is 5 percent of the employee's creditable compensation. Plan 1 state employees, with some exceptions, and Plan 2 state employees pay the 5 percent member contribution. Most Plan 1 employees of school divisions and political subdivisions pay the member contribution; Plan 2 school and political subdivision employees may pay all or a portion of the member contribution, in each case as elected by the employer. Any contributions employees make are on a pre-tax salary reduction basis. VRS holds member contributions in the member contribution account. Upon separation from employment, members are eligible to request a refund of their member contribution account balance. They will receive a full or partial refund depending on a number of circumstances, including how the member contributions were originally paid, whether or not they are vested and whether or not they are involuntarily separated from employment for causes other than job performance or misconduct. See About Refunds and Rollovers for Plan 1 and Plan 2.

• The employer contribution is determined using a rate set by the VRS actuary based on factors such as the number of employees; the number of retired employees; employee salaries, ages and mortality rates; and other actuarial assumptions such as investment earnings and inflation. VRS holds the employer contribution in the employer's retirement allowance account. It is not refundable to members.

The Commonwealth of Virginia is considered one employer. Each agency pays the same employer contribution rate for covered state employees, including faculty members who have elected the VRS defined benefit plan. Teachers are in a multiple employer cost-sharing pool. Each school division pays the same employer contribution rate for teachers and other administrative school employees.

On the other hand, each VRS-participating political subdivision pays a contribution rate determined separately by the VRS actuary based on its employee population and the benefits the locality has elected to provide to employees. Political subdivisions are not part of a pool but are separate retirement plans. VRS currently has 591 VRS-participating political subdivisions, each with separate contribution rates.

Every fall, the VRS actuary prepares an actuarial valuation for each employer group and presents it to the VRS Board of Trustees. New rates are certified for employers every two years based on the most recent actuarial valuation. The Virginia General Assembly and the Governor establish the funded rates for state employees and teachers in its biennial budget. Each political subdivision, however, must fund its respective VRS-certified rate.

Following the annual fall valuation, school divisions and political subdivisions receive a letter from VRS providing the results of the actuarial study. These employers also receive another letter in the spring providing the rates approved by the General Assembly and the Governor as set out in the biennial state budget. State agencies receive their rates from the Department of Accounts through its Payroll Bulletin.

Any changes to the rates are generally made every two years and are effective July 1 of each even-numbered year based on the actuarial valuation as of June 30 of the prior year.

Encourage Employees to View Their 2011 MBPs

Whether your employees were just hired or thinking about retiring, their Member Benefit Profile (MBP) is a valuable document that can help them plan for a secure future. The 2011 MBPs are now available in myVRS. Promotional resources, including a PDF flyer and sample MBP message, are available at MBP resources. These resources will help you encourage employees to log in or register for myVRS to view their MBP. Read more about the MBP.

Purchase of Prior Service Reminders

Out-of-State Service

Employees may purchase up to 48 months of service with a public employer or school system of another state or U.S. territory, provided the employee is not eligible for a retirement benefit under the previous plan after the purchase. If the employee is eligible for a retirement benefit with an out-of-state public employer but would like to purchase the service under VRS, he or she must take a refund from the other employer first. The employee also may transfer retirement funds from the other employer to purchase VRS service credit by submitting a Request for Trustee-To-Trustee Transfer or Rollover of Funds to Purchase Service Credit (VRS-26G) 41kb.

Leave Without Pay

If you are submitting group life insurance premiums for employees on leave without pay, these employees may purchase eligible prior service while on leave. They must use a lump-sum payment. If an employee is in a pre-tax salary reduction contract and goes on leave without pay, the contract will be suspended until the employee returns to work. However, the employee can arrange to purchase any service not covered by the contract in a lump sum while still on leave.

If you do not participate in the VRS Group Life Insurance Program and have an employee on leave without pay that would like to purchase service, the employee may purchase this service if you certify in writing to VRS that the employee is not working in a wage position and will be returning to full-time employment.

Prior Service Credit for VSDP Work-Related Short-Term Disability

State employees who go on work-related short-term disability under the Virginia Sickness and Disability Program (VSDP) will not be able to pay the 5 percent member contribution through payroll deduction or accrue service credit if they are receiving only a workers' compensation benefit. However, effective July 1, 2011, they can purchase this period as prior service credit. The cost rate for Plan 1 and Plan 2 employees is 5 percent of compensation or average final compensation, depending on the payment method they choose. Employees may apply for this service upon returning to work. The 5 percent rate will remain in effect regardless of when they apply.

Read more about purchase of prior service under Plan 1 and Plan 2.

September is Life Insurance Awareness Month

September is a good time to spread the word about the importance of life insurance. If you participate in the Group Life Insurance Program, your employees are covered under the Basic Group Life Insurance Program from the first day of employment. They also are eligible to purchase additional life insurance for themselves as well as a spouse or dependent children through the Optional Group Life Insurance Program. Remind your employees of their coverage this month by sending a link to the information on the VRS website or posting it on your internal website.

If you do not participate in the VRS program, encourage employees to include life insurance in their financial plans. According to the U.S. Census Bureau, nearly 600,000 Americans die each year in the prime of their lives. The premature death of a wage earner can leave an uninsured or underinsured family in financial ruin.

The nonprofit LIFE Foundation coordinates Life Insurance Awareness Month annually in September. Its website provides several resources for your employees including basic information on life insurance, how to purchase it, cost calculators and videos.

Member News Now Available to Employees by Subscription

Your employees can now have Member News delivered directly to their e-mail by subscribing to Member News. Please encourage employees to sign up for this fast and easy way to receive benefits information.

You also will continue to receive an email with the link to Member News to distribute to your employees or post on your internal website.

Modernization Update

VRS to Collect New Data in Preparation for Modernization

In preparation for the launch of myVRS Navigator next spring, VRS will populate employer and member data from VRS' existing systems into the new system. However, there are some new data elements that VRS is adding to our systems. If we do not have information to populate these new data fields, we will contact you in October to update or provide this new data such as:

• Authorization for official contacts who require access to information about your employees and/or the ability to complete transactions for them
• Your employee identification numbers if you are not planning to use VRS customer ID numbers
• Review and correction of VRS job names assigned to your employees
• Authorization and banking information for electronic payments
• Authorization and information about companies or organizations that perform some or all of your VRS-related functions and will be providing data or completing transactions in myVRS Navigator on your behalf. Examples include payroll or human resource management services.

Learn more about these new data elements 80kb.

October Contact Schedule

Primary administrative authorities and the Modernization Liaisons will receive an e-mail data request from VRS according to the following schedule:

October Contact Schedule

Employer Type	Date Request Will Be Sent	Date Information is Due
Political subdivisions	October 3-11	November 15
Schools and higher education	October 12-19	November 22
State agencies	October 20-27	November 29

Please respond as soon as possible once you receive the request. Your prompt response will avoid possible delays in your ability to log in to myVRS Navigator next spring to view your employees' data, create and confirm contributions to VRS and submit payments in a timely manner after implementation.

Report Current Employee Salaries on VRS-1500

Beginning now through March 2012, ensure that the Monthly Membership Report (VRS-1500) 49kb you send to VRS includes the current annual salary of each employee. Once myVRS Navigator goes live in March 2012, it will calculate creditable compensation and contributions using employees' annual salaries. Making sure salary is accurate now will mean fewer updates later as VRS populates existing data into the new system.

Next Sneak Peek to Cover Purchase of Prior Service

The next myVRS Navigator webinar, coming this month, will offer a sneak peek at purchase of prior service. In this sneak peek, you will learn about authorizing prior service and coordinating purchase agreements in myVRS Navigator. Modernization Liaisons will receive registration information soon.

Recorded Reporting and Payment Tools Sneak Peek available

Recordings of the myVRS Navigator Reporting and Payment Tools sneak peek webinars are now available. Review the version for employers with 12-month employees 176kb and/or the version for employers with less than 12-month employees 175kb.