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Member News Archives | Spring 2012 A Publication for VRS Members

Plan design legislation effective January 1, 2013 affects primarily non-vested Plan 1 members; other members affected too


Changes to current retirement provisions, to become effective January 1, 2013, will change for Plan 1 members who will not be vested by this date. Some provisions also will affect Plan 2 members and vested Plan 1 members. For more information about these and other bills passed during the 2012 session. See the 2012 Legislative Summary.

Non-vested Plan 1 members: Purchase prior service now


If you are currently a non-vested Plan 1 member who has prior service eligible for purchase that would bring you to vested status by January 1, 2013, consider purchasing this service as soon as possible. Doing so will ensure the credit is applied to your member record before January 1, 2013, when plan design changes go into effect.

Eligible types of prior service

  • VRS-refunded service
  • Active duty military service
  • Full-time salaried federal or other public service
  • Non-covered service with a VRS-participating employer
  • Approved leave for the birth or adoption of a child or approved educational leave, provided you were on leave from a covered position
  • Non-ported service if you transferred to a VRS-covered position from a non-VRS employer with which VRS has a portability agreement and not all your service transferred
  • Service not reported when you were on short-term work-related disability under the Virginia Sickness and Disability Program
  • Effective July 1, 2012, service when you were not reported due to being on workers' compensation.

If you were on military leave for active duty military service, you also may be eligible to receive service credit for this leave at no cost provided you are not  dishonorably discharged and returned to covered employment within one year of discharge.

If you have been approved to purchase service, this information is available in your myVRS online account. Log in or create an account to view your eligible prior VRS service.

Contact your human resource office for assistance in applying for purchase of prior service.

Learn more about the current Plan 1 prior service provisions and how to apply.

See more about the cost to purchase service and your eligibility period.

Local employees and teachers to begin paying the 5 percent member contribution effective July 1

If you are employed by a school division or a political subdivision and your employer currently pays your member contribution toward your retirement, you will begin paying the member contribution effective July 1, 2012 under legislation approved during the 2012 General Assembly Session. The legislation also states that your employer will provide you an offsetting salary increase.

The member contribution is 5 percent of your salary, contributed each month to your member contribution account. If you are affected by this legislation, your employer may elect to have employees pay the full 5 percent effective July 1, 2012 or phase in the amount you pay each year at a minimum of 1 percent per year, until you are paying the full 5 percent by July 1, 2016. Your offsetting salary increase will be equal to the amount of the member contribution your employer elects for you to pay beginning July 1.

You will make the member contribution on a pre-tax salary reduction basis. That means you will not pay income taxes on your contributions until you receive your retirement benefit or if you leave employment and request a refund.

Your human resource office will have more information about the amount of your member contribution and your offsetting salary increase.

What other legislation passed during this session?

Two bills passed during the 2012 session contained emergency clauses and are effective now:

  • One bill removes the mandatory retirement age of 70 for regional jail and jail farm superintendents.

  • Another bill removes the military disability benefit offset for the Virginia Sickness and Disability Program (VSDP). If you are covered under VSDP and go on disability, your benefit will not be reduced by any military disability benefits you may be eligible to receive for the same condition.

Bills effective July 1, 2012 cover a variety of provisions, including a new purchase of prior service category that allows employees who are not reported to VRS while receiving a workers’ compensation benefit to purchase this service while actively employed.

See a summary of all 2012 legislation.

Mandatory hybrid retirement plan goes into effect on January 1, 2014

Any employee who is hired for the first time in a covered position, with no VRS creditable service, on or after January 1, 2014 will be enrolled in a new mandatory hybrid retirement plan. This legislation includes judges appointed or elected to an original term on or after January 1, 2014. Members of SPORS and VaLORS, and political subdivision employees who have enhanced hazardous duty coverage, are exempt from this bill. A hybrid retirement plan combines the features of a defined benefit plan and a defined contribution plan. Current members in Plan 1 and Plan 2 may elect to transfer to the hybrid retirement plan during a one-time 90-day election period after January 1, 2014. This will be an irrevocable election.

Defined Contribution Plan news: VRS to reshape investment options

stock exchange

VRS is changing the investment fund lineup in the Defined Contribution Plans, effective July 23. These changes will provide you with maximum flexibility in choosing funds and a more streamlined selection of funds.

The investment fund lineup now will include target date portfolios, which offer a diversified mix of stocks, bonds and other asset classes, based on a projected retirement date.

The changes apply to the 457 Deferred Compensation Plan, the Virginia Cash Match Plan, the Optional Retirement Plans for Political Appointees and School Superintendents and the Virginia Supplemental Retirement Plan. You can choose from three investment paths:

  1. Do-It-for-Me Path. Includes a series of target date portfolios to offer retirement investing solutions for participants who prefer a pre-mixed portfolio that is already diversified. Participants select portfolios based on a projected retirement date and their own personal circumstances.

  2. Help-Me-Do-It Path. Includes a carefully selected menu of funds for participants who prefer to take a more active role in investing and who want to construct a portfolio that addresses their individual needs.

  3. Do-It-Myself Path. A self-directed brokerage account is provided for those who believe themselves to be skilled and knowledgeable about investments. Investments include mutual funds, exchange traded funds (ETFs) and individual securities. The Self-Directed Brokerage Account is currently offered through the plans.

As these changes go into effect, options are streamlined, with some of your existing investment options remaining and others changing. Throughout the investment changes, you will receive letters discussing the impact on your current selections.

Look for more information in upcoming issues of DC Plans Focus newsletter, on the VRS website and in the mail.

Featured FAQ: What does it mean to become vested?

Vesting means you have accumulated enough service credit to be eligible to qualify for a retirement benefit when you meet the current age and service requirements for your plan. Under VRS, you become vested when you have at least five years (60 months) of service credit. Your service credit includes service you earn as a covered employee as well as any prior service you may purchase or may be granted by your employer. If you leave covered employment and request a refund, you also must be vested to be eligible for a full refund of your member contribution account balance. If you are not vested, your refund will exclude any member contributions made by your employer to your account after July 1, 2010 and the interest on these contributions. Taking a refund cancels your membership and eligibility for any future VRS benefits.