VRS Board Approves Rates for Localities

RICHMOND, VA, Nov. 9, 2005—The Virginia Retirement System (VRS) Board of Trustees today approved employer contribution rates for participating local government employers across the state. Of the 561 entities that participate in VRS, 76 percent will experience a rate increase and 24 percent will see the rate stay the same or decline. Rates become effective July 1, 2006.

“These rates mark a return to the rates the localities experienced during the 1980s, before the stock market boom years of the 1990s,” said Paul W. Timmreck, chairman of the $45-billion system. Timmreck attributed the increases to:

A weak market environment from 2001 through 2003.
Recognition of investment gains and losses using a five-year “smoothing” method, which includes the weak market environment of 2001 through 2003.
Revised assumptions that show retirees living longer and collecting retirement benefits over a longer period.
Lower estimates of future investment gains (7.5% vs. 8.0% annually) and lower estimates for inflation (2.5% vs. 3.0%).
Employers providing enhanced benefits to employees or providing pay increases over projections.

Employers who elect to provide retirement benefits to their employees through VRS pay the retirement system a certain rate based on their employee payroll. This amount, along with investment earnings and any employee contributions, funds the future retirement benefits of employees.

Contact: Jeanne Chenault 804-697-6665

VRS is the 27th largest public or private pension fund in the United States and the 48th largest internationally with over $45 billion in assets.

News is archived every four months.