In This Edition
- Subscribe to Member News
- View your future: Your 2011 online MBP is arriving by the end of August
- Track your savings progress and plan for retirement through myVRS
- State employee in Plan 1? What “5 and 5” means for your retirement
- National Save for Retirement Week is October 16-22
- Many optional group life insurance participants see a decrease in rates
- VRS introduces more member education options
- What is the Basic Benefit?
- Moving to another covered position: Will your benefits change?
- 457 Plan News
- Featured FAQ — What happens to my unused sick leave at retirement?
Subscribe to Member News
Now you can receive the latest benefit news as soon as it is posted. Starting with this issue, you can subscribe to Member News and have it sent directly to your email address. That means that you can read the latest news through your account at home, at work or on the go with your mobile device. All you need to do is complete the Member News subscription box with your email address.
Note: We will continue to send Member News to your employer for distribution or posting on your agency's internal website.
View your future: Your 2011 online MBP is arriving by the end of August
This month, you’ll be getting a glimpse of your future in your 2011 Member Benefit Profile (MBP). The MBP is your annual online benefit statement available through myVRS. It is based on information your employer reported to VRS as of June 30.Your statement gives you an idea of where you are now and what your benefits could look like in retirement. It includes:
- Your earliest unreduced and reduced retirement eligibility dates
- Estimated retirement benefit amounts
- Estimated value of your retirement benefit – this figure shows the amount of funds from insurance or savings you would need at retirement to equal the value of your VRS benefit over your expected lifetime
You also can see your member contribution account balance and life insurance coverage and, if you participate in the Commonwealth’s 457 Plan, your contributions and plan balance as of June 30.
Income Analysis
To maintain a reasonable standard of living when you retire, experts say you will need at least 80 percent of your current earnings during retirement. If you are eligible to participate in the Commonwealth’s 457 Plan, your MBP includes an income analysis feature. This feature shows your estimated VRS retirement benefit and estimated income from other sources such as the 457 Plan and Social Security. You can compare these estimates to your 80 percent retirement income goal. The analysis also includes tips for enhancing your retirement income.
To view your MBP
From your myVRS member online account, select the Member Benefit Profile (MBP) link from the left column. Then select your 2011 statement.
- Not registered for myVRS? Register Now
- Registered but forgot your password? Select Forgot Username or Password. If you need help, select the link to myVRS Help.
Track your savings progress and plan for retirement through myVRS
Along with your MBP, the myVRS Retirement Planner can help you track your savings progress and develop a retirement income plan that will meet your needs and those of your family when you retire:
- Include your estimated unreduced VRS retirement benefit based on a retirement date you select. If you are in Plan 1, you can use the myVRS Benefit Estimator to create benefit estimates based on different payout options or retirement dates and enter one of these in your plan.
- Add other retirement income such as income from a spouse, a part-time job or Social Security (if you are eligible on the retirement date you use for your plan).
- Include income from the Commonwealth of Virginia 457 Deferred Compensation and Cash Match Plans, a 403(b) plan or another tax deferred savings plan. If you participate in the 457 and Cash Match Plans, you can look up your account balance and track your savings progress.
- Build in retirement expenses, including income taxes and health insurance. You can use the assumptions provided in the planner or enter your own figures.
State employee in Plan 1? What “5 and 5” means for your retirement
Effective June 25, if you are a state employee in Plan 1, you received a 5 percent salary increase and saw a pre-tax salary reduction for the 5 percent member contribution for your retirement benefit. These changes were reflected in your July 15 pay. The legislation, which has become known as the “5 and 5” was passed by the 2011 General Assembly.
This change does not affect Plan 1 state elected officials and judges, optional retirement plan (ORP) participants, Plan 2 state employees and wage employees. It also excludes Plan 1 and Plan 2 employees in local government positions reimbursed by the Compensation Board.
Some state employees may have seen a slight decrease in take-home pay because the higher salary amount increased the FICA tax deduction and other salary-based withholdings.
Effects that “5 and 5” have on your VRS benefits:
- Your raise increased your average final compensation (AFC). This is one of the factors used to calculate your retirement benefit under Plan 1
- Basic and optional group life insurance benefits also increased since they are based on your salary; the optional group life insurance premiums will increase in January.
- If you are covered under the Virginia Sickness and Disability Program (VSDP) and go on short-term or long-term disability, your income replacement will be based on your higher salary.
- If you have eligible prior service and want to purchase this service as credit in your plan, your cost will be higher since it is based on your compensation or average final compensation, whichever is higher or depending on the payment method you use.
Talk to your human resource officer or see the Department of Human Resource Management (DHRM) Frequently Asked Questions for more information.
National Save for Retirement Week is October 16-22
National Save for Retirement Week was created to raise awareness of retirement savings and the ease of saving through employer-sponsored retirement plans, such as the Commonwealth of Virginia 457 Deferred Compensation Plan, the 403(b) plan and other tax-deferred savings plans.
Putting away as little as $10 per pay period – or increasing your savings by $10 – could have a big impact on your future nest egg. And, saving can work no matter where you are in your career:
- Save $20 a pay period in your 457 or other tax deferred plan and in 40 years, you could have more than $100,000.
- Increase your contributions to $40 a pay period and, if you are eligible for a cash match, you could have $117,084 in 30 years. See July 2011 issue of Focus
386kb. - Sometimes saving seems really hard, especially if your income is limited. The government has a special Saver’s Credit just for you. If you are eligible, you can actually receive money back when you file your tax return.
Read more about saving for retirement.
Many optional group life insurance participants saw a decrease in rates
If you participate in the Group Optional Life Insurance Program, you may have seen a decrease in the premium deductions from your paycheck.
Effective July 1, Minnesota Life, the administrator of the Group Optional Life Insurance Program, revised optional group life insurance rates for three age brackets:
- Age 30-34
Reduced from $0.07 to $0.06 per month per $1,000 of coverage - Age 50-54
Reduced from $0.22 to $0.21 per month per $1,000 of coverage - Age 55-59
Reduced from $0.43 to $0.40 per month per $1,000 of coverage
Rates for all other age brackets and rates for coverage for dependent children were not changed.
| Age of Member/Spouse Monthly | Cost Per $1,000 of Coverage |
|---|---|
| Under 30 | $0.05 |
| 30 to 34 | $0.06 |
| 35 to 39 | $0.08 |
| 40 to 44 | $0.09 |
| 45 to 49 | $0.14 |
| 50 to 54 | $0.21 |
| 55 to 59 | $0.40 |
| 60 to 64 | $0.66 |
| 65 to 69 | $1.27 |
| 70 to 74 | $2.06 |
| 75 & Over | $2.06 |
| Option (Coverage Level) |
Cost of Coverage | Child Coverage Amount |
|---|---|---|
| 1 | $0.80 | $10,000 |
| 2 | $0.80 | $10,000 |
| 3 | $1.60 | $20,000 |
| 4 | $2.40 | $30,000 |
VRS introduces more member education options
Over the next several months, VRS will be introducing new courses as well as additional educational mediums, including live presentations, seminars, webinars, e-courses and regional meetings.
Available now
The new courses start with a series of financial literacy courses. Current topics include banking, credit, taxes and investments. Future topics will include financial planning and home finance. Presentations on individual benefit topics, such as purchase of prior service and retirement payout options, continue to be available, as do Retirement Education Seminar I and Retirement Education Seminar II.
Coming this fall
Future retirement education will focus on planning for retirement at different milestones: just starting out, continuing your career, within five years of retirement and ready to retire. If you are new to VRS or have been a member for a while, the "Are You on Track?" presentation will explain what it means to be a VRS member and what you can do now to help prepare for the future. If you are within five years of retirement, the "Are You Ready?" presentation will walk you through your important retirement decisions. If you are within a year of retirement, the "Retirement: Your Next Steps" presentation will walk you through VRS' service retirement process.
Learn more about these courses and your VRS benefits, finances and retirement planning at Education and Counseling. You can meet with a member counselor at VRS at 1200 East Main Street in downtown Richmond. Sessions are offered on a first-come first-served basis. Counseling hours are 8:30 a.m. - 4 p.m., Monday through Friday. Limited scheduled telephone or in-person appointments are available. Call VRS toll free at 1-888-VARETIR (1-888-827-3847) for more information.
What is the Basic Benefit?
The Basic Benefit is a benefit payout option that is based on your age, total years of service credit and average final compensation. The unreduced basic benefit amount is calculated using a percentage of your average final compensation multiplied by your total years of service credit. This percentage is called a retirement multiplier. An early retirement reduction factor 479kb is applied to this amount if you retire before meeting minimum age and service eligibility for an unreduced retirement benefit.
The retirement multiplier can vary, depending upon your plan – VRS, VaLORS, JRS, SPORS or enhanced coverage for hazardous duty employees. Also, the definition of average final compensation is different for Plan 1 and Plan 2 participants.
The Basic Benefit does not provide a continuation of a benefit to a survivor. However, your named beneficiary may be eligible for a lump-sum payment of any remaining funds in your member contribution account upon your death.
Example: The member is in Plan 1 and retiring at age 50 with 30 years of service credit with a 1.7 percent retirement multiplier:
| Formula | Example |
|---|---|
| Average Final Compensation x 1.7%* | $ 42,000.00 |
| x .017* | |
| x Years of Service Credit | x 30 |
| Annual Benefit Amount ÷ 12 Months | $ 21,420.00 |
| ÷ 12 | |
| Monthly Benefit Amt. Before Taxes & Other Deductions | $ 1,785.00 |
*Your retirement multiplier may vary if you are eligible for enhanced hazardous duty coverage, SPORS or VaLORS.
Your total service credit includes:
- Active service. You earn one month of service credit for each month you are employed in a covered position.
- Prior service credit. You may be eligible to purchase prior public service, certain periods of leave or VRS refunded service as service credit in your plan.
To obtain a personalized benefit estimate using either the Basic Benefit or any other payout option, please use the online benefit estimator available at myVRS.
Moving to another position: Will your benefits change?
You’ve been working as a campus police officer covered under the Virginia Law Officers’ Retirement System (VaLORS) while studying for your teaching degree. Now you are a teacher in a VRS-covered position in a public school system.
Or, you’ve enjoyed working in your county government, but your heart is in volunteering as an emergency medical technician and you recently were hired as full-time salaried Emergency Medical Technician, covered under VRS with enhanced hazardous duty coverage.
What happens when you move from one position to another? In some cases, the provisions for retirement and other benefits may change. Follow these links for the provisions of each plan.
- VRS Plan 1 or Plan 2
- SPORS Plan 1 or Plan 2
- VaLORS Plan 1 or Plan 2
- Enhanced Benefits for Eligible Political Subdivision Employees Plan 1 or Plan 2
- JRS Plan 1 or Plan 2
See also Member Handbooks & Guides.
Note: If you participate in the Commonwealth’s 457 Deferred Compensation Plan and move to another employer that provides the 457 Plan, give your new employer a completed Payroll Authorization-Agency Transfer and Return to Work 50kb to continue your contributions and to continue receiving the employer cash match, if it is offered by your new employer.
457 Plan News
You now have more choices if you invest in the self-directed brokerage account
The Self-Directed Brokerage Account (SDBA) available through the VRS defined contribution plans for which ING is the record keeper, now offers exchange-traded funds and individual stocks and bonds in addition to the current mutual funds offerings. As a result, SDBA account holders will be transferred to a new account number.
The Self-Directed Brokerage Account (SDBA) is offered through TD AMERITRADE. It is for knowledgeable investors who understand the risks and costs associated with the investments available through the SDBA. Call toll free at 1-VRS-DC-PLAN1 (1-877-327-5261) for more information.
Featured FAQ — What happens to my unused sick leave at retirement?
If you are not covered under the Virginia Sickness and Disability Program (VSDP), you may be eligible to cash out your unused sick leave up to a certain amount. Your human resource office can advise you.
Or, if you are eligible for a payment for unused sick leave, you may elect to convert all or a portion of this payment to service credit toward your retirement benefit calculation. The additional service credit also will count toward eligibility for the health insurance credit.
If you choose to convert your sick leave, your employer will deduct the appropriate tax withholding from the payment and send the remainder of the payment to VRS. VRS will calculate the service credit represented by this amount based on an actuarial equivalent rate. The amount of the sick leave payout determines the amount of service that you can purchase.
If you participate in the Virginia Sickness and Disability Program(VSDP), you are not eligible to purchase service credit using accumulated sick leave.
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