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Glossary of Terms

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Active Member(http://www.varetire.org/glossary/index.asp#member-active)
You are an active member if you are working in a covered position with an employer that participates in the Virginia Retirement System (VRS) or you are covered under an optional retirement plan (ORP) administered by VRS. Covered employment is a full-time permanent, salaried position. Some part-time permanent, salaried state positions also are covered under VRS.

Active service(http://www.varetire.org/glossary/index.asp#active-service)
Active service is the number of years you work in a covered position. You earn one month of service credit for each month you are employed (in service).

Activities of Daily Living(http://www.varetire.org/glossary/index.asp#activities-of-daily-living)
You may need long-term care if you cannot perform at least two of the following activities of daily living: bathing; transferring, such as getting in and out of bed; dressing; toileting (using the bathroom);continence; or eating (ability to feed oneself).

Actuarial Equivalent Cost(http://www.varetire.org/glossary/index.asp#actuarial-equivalent-cost)
Actuarial equivalent cost represents the amount of money needed in today's dollars to pay for the total value of the increase in your future retirement benefit or earlier retirement eligibility date resulting from purchasing prior service. If you purchase prior service after your two-year approximate normal cost window, your cost will be actuarial.

Actuarial Equivalent Rate(http://www.varetire.org/glossary/index.asp#actuarial-equivalent-rate)
Actuarial equivalent rate represents the amount of money needed in today's dollars to pay for the increase in your future retirement benefit or earlier retirement eligibility date resulting from purchasing prior service. If you purchase prior service after your eligibility period, your cost will be based on this rate.

Approved Domestic Relations Order (ADRO)(http://www.varetire.org/glossary/index.asp#adro)
If you divorce and your retirement benefit is part of a marital property settlement, VRS will receive a certified Approved Domestic Relations Order (ADRO) by the court directing it to make a payment of part of your benefit to your former spouse.

Approximate Normal Cost(http://www.varetire.org/glossary/index.asp#approximate-normal-cost)
Approximate normal cost is the average cost of one year of VRS service credit. The cost is based on a percentage of your creditable compensation or average final compensation at the time of purchase, whichever is higher.

Average Final Compensation(http://www.varetire.org/glossary/index.asp#average-final-compensation)
Average final compensation is one of the factors used to calculate your retirement benefit. For Plan 1 members, it is the average of your 36 consecutive months of highest creditable compensation as a covered employee. For Plan 2 and Hybrid Retirement Plan members, it is the average of your 60 consecutive months of highest creditable compensation as a covered employee.

Bona Fide Break In Service(http://www.varetire.org/glossary/index.asp#bona-fide-break-in-service)
A bona fide break in service is a break of at least one full calendar month from your retirement date over a period you normally would work. Periods of leave with or without pay do not count toward satisfying this break in service. For retired teachers and faculty members, summer breaks, intersession periods, educational leave and sabbaticals also do not count toward satisfying this break.

Career State Service(http://www.varetire.org/glossary/index.asp#career-state-service)
Career state service includes full-time and part-time salaried state service and absences for military leave, layoffs, temporary workforce reductions or periods of reduced hours or job restrictions while on short-term or long-term disability-working.

Catastrophic Condition(http://www.varetire.org/glossary/index.asp#catastrophic-condition)
A catastrophic condition means you are unable to perform at least two of the following activities of daily living without substantial assistance: bathing, transferring (getting in and out of bed), dressing, toileting (using the bathroom), continence and eating (ability to feed oneself). Your condition also may be considered catastrophic if you have a severe cognitive impairment, such as Alzheimer's disease, and require substantial supervision or are placed in a guardianship.

Cognitive Disability(http://www.varetire.org/glossary/index.asp#cognitive-disability)
A cognitive disability is a loss or deterioration in intellectual capacity. An example is Alzheimer's disease.

Consumer Price Index-Urban (CPIU)(http://www.varetire.org/glossary/index.asp#consumer-price-index-urban)
As defined by the U.S. Bureau of Labor Statistics, the Consumer Price Index-Urban measures the average change over time in the prices paid by urban consumers for goods and services such as food, housing, apparel, transportation, medical care, recreation, education, communication and other goods and services.

Covered Employment(http://www.varetire.org/glossary/index.asp#covered-employment)
Covered employment is a full-time permanent, salaried position with an employer that participates in the Virginia Retirement System (VRS) or under an optional retirement plan (ORP) administered by VRS. Some part-time permanent, salaried state positions and non-adjunct faculty positions requiring at least 20 hours, but less than 40 hours a week, also are covered under VRS.

Creditable Compensation(http://www.varetire.org/glossary/index.asp#compensation)
Creditable compensation is your annual salary not including overtime pay, payment of a temporary nature or payments for extra duties such as pay for teachers who provide coaching or act as an advisor for special activities.

Creditable Service(http://www.varetire.org/glossary/index.asp#creditable-service)
Creditable service includes active service for each month you are working in a covered position as well as credit for prior service you may purchase or additional service you may be granted. Creditable service counts toward vesting in Plan 1, Plan 2 and both components of the Hybrid Retirement Plan. Creditable service is used to determine your eligibility for retirement and to calculate your retirement benefit in your defined benefit plan. It also counts toward qualifying for the retiree health insurance credit if offered by your employer.

Deferred Member(http://www.varetire.org/glossary/index.asp#member-deferred)
You are a deferred member if you have left covered employment but have not withdrawn your funds and have service credit in VRS or an account balance in a Virginia optional retirement plan.

Defined Benefit Component(http://www.varetire.org/glossary/index.asp#defined-benefit-component)
The defined benefit component under the Hybrid Retirement Plan provides a retirement benefit based on your age, total creditable service and average final compensation at retirement. VRS manages the investments and related risk for member and employer contributions under this component.

Defined Benefit Plan(http://www.varetire.org/glossary/index.asp#defined-benefit-plan)
The retirement plan under VRS is a defined benefit plan for Plan 1 and Plan 2 members. This plan provides a monthly benefit during retirement based on age, total service credit and average final compensation.

Defined Contribution Component(http://www.varetire.org/glossary/index.asp#defined-contribution-component)
The defined contribution component of the Hybrid Retirement Plan provides a retirement benefit based on member and employer contributions and net investment gains on contributions. Members manage the investments and related risk for this component.

Defined Contribution Plan(http://www.varetire.org/glossary/index.asp#defined-contribution-plan)
The benefit under a defined contribution plan for Plan 1 and Plan 2 members is based on contributions and net investment gains on these contributions. The defined contribution plans administered or authorized by VRS include the Commonwealth of Virginia 457 Deferred Compensation and Cash Match Plans, optional retirement plans for selected employees and a supplemental plan for certain school employees.

Hazardous Duty Supplement(http://www.varetire.org/glossary/index.asp#hazardous-duty-supplement)
Hazardous duty employees who retire with at least 20 years of hazardous duty service credit may be eligible to receive a supplement to their retirement benefit. The supplement is a dollar amount added to the monthly benefit payment. It continues until normal Social Security retirement age for state police officers and political subdivision employees eligible for enhanced hazardous duty coverage. It continues until age 65 for Virginia law officers under the 1.7% retirement multiplier. Virginia law officers under the 2.0% multiplier are not eligible for the supplement.

Hybrid Retirement Plan(http://www.varetire.org/glossary/index.asp#hybrid-retirement-plan)
You are covered under the Hybrid Retirement Plan if your membership date is on or after January 1, 2014. This includes judges elected or appointed to an original term on or after January 1, 2014, regardless if vested to VRS Plan 1 or VRS Plan 2. You are not eligible to participate in the hybrid plan if you are a member of SPORS, VaLORS or a political subdivision covered by enhanced benefits for hazardous duty employees or the hazardous duty alternate option. If you were hired on or after January 1, 2014 and are eligible for an Optional Retirement Plan, you must elect the ORP or the VRS Hybrid Retirement Plan. If you have prior service under Plan 1 or Plan 2, you are not eligible to elect the hybrid plan and will choose between the ORP or the applicable VRS defined benefit plan.

Note: Plan 1 and Plan 2 state, school division and political subdivision employees had the opportunity to make an irrevocable decision to elect the Hybrid Retirement Plan during an election period held January 1 to April 30, 2014. If elected, participation in the hybrid plan began July 1, 2014.

Major Chronic Condition(http://www.varetire.org/glossary/index.asp#chronic-condition)
A major chronic condition is a life-threatening health condition that exists over a prolonged period of time and is not expected to improve.

Minimum Guaranteed Benefit(http://www.varetire.org/glossary/index.asp#minimum-guaranteed-benefit)
If you qualify for primary Social Security benefits, the minimum guaranteed benefit will be equal to 33? percent of your average final compensation. You will receive the minimum guaranteed benefit or the full VRS formula amount, whichever is higher. If you do not qualify for primary Social Security benefits, the minimum guaranteed benefit will be equal to 50 percent of your average final compensation. You will receive the minimum guaranteed benefit or the full VRS formula amount, whichever is higher.

Non-Covered Employment(http://www.varetire.org/glossary/index.asp#non-covered-employment)
Non-covered employment is a part-time position with a VRS-participating employer. Non-covered positions do not provide eligibility for benefits. Part-time positions typically require less than 80 percent of the hours of comparable full-time permanent positions. Some full-time positions may be considered non-covered if they are temporary and require less than 80 percent of the hours per year that would be considered full-time and permanent for that position.

Plan 1(http://www.varetire.org/glossary/index.asp#plan-1)
You are covered under Plan 1 if your membership date is prior to July 1, 2010, and you were vested before January 1, 2013, and have not taken a refund. You are covered under Optional Retirement Plan 1 if you have an ORP membership date before July 1, 2010, and maintain an account balance. If you have a pre-July 1, 2010, ORP account balance and moved to a defined benefit plan, you must have any combination of VRS creditable service and/or ORP participation that totals five years as of January 1, 2013 to be considered a Plan 1 member.

Plan 2(http://www.varetire.org/glossary/index.asp#plan-2)
You are covered under Plan 2 if your membership date is from July 1, 2010, to December 31, 2013, and you have not taken a refund. Additionally, you are covered under Plan 2 if you have a membership date prior to July 1, 2010, but you were not vested before January 1, 2013. You are covered under Optional Retirement Plan 2 if you have an ORP membership date after July 1, 2010, and maintain an account balance. If you are a member of VaLORS or SPORS, or an employee of a political subdivision that covers you with enhanced hazardous duty benefits or the hazardous duty alternate option under VRS and were hired on or after July 1, 2010, you are in Plan 2, even if your membership date is after December 31, 2013.

Retiree(http://www.varetire.org/glossary/index.asp#member-retired)
You are a retiree if you are no longer employed in a covered position and are receiving a retirement benefit from VRS.

Retirement Multiplier(http://www.varetire.org/glossary/index.asp#retirement-multiplier)
Under the VRS Plan 1, the retirement multiplier is 1.7 percent for service and disability retirement. Under the VRS Plan 2, the retirement multiplier is 1.65 percent for service retirement for service earned, purchased or granted on or after January 1, 2013. Service earned, purchased or granted before this date comes under the 1.7 percent multiplier. For disability retirement under the VRS Plan 2, the multiplier is 1.65 percent on all service, regardless of when it was earned, purchased or granted. Under SPORS, and for sheriffs and regional jail superintendents, the multiplier is 1.85 percent. Under VaLORS, the multiplier is 2.0 percent. For all other political subdivision hazardous duty employees, the retirement multiplier is 1.7 percent, unless the employer elected the 1.85 percent multiplier for these employees.

Transitional Retirement Credit(http://www.varetire.org/glossary/index.asp#transitional-retirement-credit)
The number of years that can be used to enhance the member's VRS retirement benefit.

Transitional Severance Payment(http://www.varetire.org/glossary/index.asp#transitional-severance-payment)
The amount the member may receive as a severance benefit when not using the additional service credit toward a VRS retirement benefit.

Vested(http://www.varetire.org/glossary/index.asp#vested)
You become vested in VRS when you have at least five years of service credit. Vesting is the minimum length of service needed to qualify for a future retirement benefit, if you meet the age and service requirements for your plan, or to receive any contributions made by your employer to your member contribution account after July 1, 2010 should you leave covered employment and request a refund.

VRS Refunded Service(http://www.varetire.org/glossary/index.asp#vrs-refunded-service)
Service represented by a refund of member contributions and interest is called refunded service. If you leave covered employment, take a refund and return to covered employment, you can purchase your refunded service and add it as credit toward your plan.

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