In This Edition
In This Edition
- Summary of January 1, 2013 plan changes
- Non-vested Plan 1 members are now Plan 2
- Introducing the VRS Hybrid Retirement Plan
- 2013 legislature in session through February 23
- VRS Annual Financial Report available online
- Make this the year you take control of your retirement planning
- Getting married? Having a baby? Consider the optional life plan
- Options if you leave your job
- The health insurance credit – what is it and are you eligible?
- Virginia Department of Taxation changes how it pays refunds
- Featured FAQ: What is the difference between Plan 1 and Plan 2?
Summary of January 1, 2013 plan changes
Did your retirement benefits change on January 1? The 2012 General Assembly passed legislation that made changes to benefits for certain VRS members:
The retirement multiplier is now 1.65 percent for service earned, purchased or granted on or after January 1, 2013 for Plan 2 employees (except for SPORS and VaLORS members and members covered under enhanced benefits for hazardous duty positions with political subdivisions).
The disability retirement multiplier for Plan 2 members changed to 1.65 percent on all service, regardless of when it was earned, purchased or granted. The disability retirement multiplier remains at 1.7 percent for Plan 1 members. The minimum guaranteed benefit did not change for Plan 1 or Plan 2 members.
If you retire with a reduced benefit and fewer than 20 years of service credit, you will become eligible for a cost-of-living adjustment (COLA) on July 1 after one full calendar year (January 1 through December 31) from the date you would have become eligible for an unreduced benefit. This applies to both Plan 1 and Plan 2 members. If you were within five years of qualifying for an unreduced benefit as of January 1, 2013 or if you retire with at least 20 years of service credit, you will begin receiving the COLA on July 1 after one calendar year from your actual retirement date.
The maximum COLA amount for Plan 2 members is now 3 percent.
For more information on the changes see the VRS 2012 Legislative Summary 46kb.
Non-vested Plan 1 members are now Plan 2
As of January 1, 2013, if your VRS membership date was before July 1, 2010, but you were not vested (you had five or fewer years of service credit), you became a Plan 2 member, with different retirement eligibility requirements and benefits than you had in Plan 1.
To see a description of your benefits under Plan 2, refer to the member handbook for your plan. You can get a handbook from your employer, request one from the customer contact center at 1-888-VARETIR (1-888-827-3847) or view one online.
Introducing the VRS Hybrid Retirement Plan
Most employees hired on or after January 1, 2014 will join VRS as members of the new VRS Hybrid Retirement Plan. The hybrid retirement plan combines the features of a defined benefit plan – a monthly retirement benefit based on age, total service credit and average final compensation, with features of a defined contribution plan – a retirement benefit based on contributions and investment performance of these contributions.
Current VRS Plan 1 and Plan 2 members will have the option to transfer to the hybrid retirement plan during a one-time election period January 1 through April 30, 2014. If current members decide to transfer to the hybrid plan, the transfer is irrevocable and will become effective July 1, 2014.
Members of the State Police Officers’ Retirement System (SPORS), Virginia Law Officers’ Retirement System (VaLORS) and hazardous duty employees covered under enhanced benefits are exempt from the hybrid retirement plan and will remain covered under their current plans.
Also, employees hired on or after January 1, 2014 who have service in a VRS defined benefit plan from prior employment are exempt.
Stay tuned for more information about the hybrid plan in future issues of Member News and on the VRS website.
2013 Legislature in session through February 23
The 2013 session of the General Assembly began on January 9 and is scheduled to end on February 23. To keep track of legislation affecting your VRS benefits, follow the Legislative Tracker and read the Legislative Summary in the April issue of Member News.
VRS Annual Financial Report available online
The VRS 2012 Comprehensive Annual Financial Report is now available on the VRS website publications web page. The annual report summarizes VRS investment performance during the last fiscal year and provides details on investment returns, benefits and distributions. It also features statistics on employer, member and retiree participation, and assesses how well VRS staff met performance goals in 2012.
Make this the year you take control of your retirement planning
Learning how to manage your finances and prepare for retirement is a new year’s resolution that can help make your future years easier. VRS has the tools and resources to get you started.
Money Matters for Virginians is a series of courses providing the basics on establishing credit, buying a home, saving and investing. View these free courses any time you want and go through them at your own pace.
A myVRS account allows you to keep track of your retirement benefits as you go through your career and use the myVRS Retirement Planner to estimate your retirement income needs. If you are in Plan 1, your myVRS account also gives you access to your Member Benefit Profile (MBP), a yearly snapshot of the amount currently in your VRS member account, your years of service, projected retirement date and benefit amount, and any group life and optional life insurance coverage you may have.
If you participate in the Commonwealth of Virginia 457 Deferred Compensation Plan, your MBP includes a customized retirement income analysis of your future retirement income measured against what you would likely need for a comfortable retirement, and tips for closing the gap.
Retirement planning sessions scheduled around the state and available in recorded presentations, give practical advice on increasing your retirement benefit, long- and short-term saving, estate planning, legal concerns and managing retirement finances. These sessions are tailored to help you prepare for retirement no matter where you are in your career.
Getting married? Having a baby? Consider the optional life plan
If you are covered under the VRS Group Life Insurance Program, you may purchase additional coverage for yourself, a spouse or dependent children through the Optional Group Life Insurance Program. Optional group life insurance provides benefits for natural and accidental death or dismemberment. You pay the premiums through payroll deduction.
Select one of four coverage options to cover yourself, up to a maximum of $700,000, and cover your spouse for up to half the maximum amount of the coverage you select for yourself, not to exceed $350,000.
You can cover each dependent child who is at least 15 days old for $10,000, $20,000 or $30,000, depending on the coverage option you select for yourself. Coverage for dependent children ends when your coverage ends or your child marries, becomes self-supporting, reaches age 21 or reaches age 25 as a dependent attending college full time. Coverage continues for dependent unmarried children who are disabled.
Options if you leave your job
If you leave covered employment before retirement, you can:
- Take a refund of your member contributions and interest. Taking a refund cancels your membership and eligibility for any future benefits; or
- Leave your funds with VRS and become a deferred member
If you are vested and leave your funds with VRS, you may be eligible for a future retirement benefit if you meet the age and service requirements for your plan.
Before you decide, check your member contribution account balance and view your other benefit information through myVRS. Log in or create a secure online myVRS account. Also, keep in mind that if you take a refund and later return to VRS-covered employment, you will be in Plan 2 even if you were in Plan 1 before you took the refund. Knowing this information may help you weigh your options if you are thinking of leaving covered employment. You also can contact your human resource office or call VRS toll free at 1-888-VARETIR (1-888-827-3847) for assistance.
The health insurance credit – what is it and are you eligible?
The health insurance credit is a tax-free retirement benefit that reimburses you for a portion of your health insurance premiums in retirement. It is a dollar amount set by the General Assembly for each year of your service credit at retirement and cannot exceed the amount of your individual health insurance premiums for single coverage. The health insurance credit is applied to your retirement benefit payment.
You are eligible if you retired with at least 15 years of service credit as a:
- State employee;
- Teacher or administrative school employee;
- General registrar or employee of a general registrar;
- Constitutional officer or employee of a constitutional office;
- Local social service employee; or
- Employee of a political subdivision that elected to offer the health insurance credit to its retirees.
You also are eligible for the credit if you are an Optional Retirement Plan (ORP) participant with at least 15 years of service credit, begin a periodic distribution or annuity from the ORP, and you have reached the minimum age for service retirement under the VRS defined benefit plan. However, to keep receiving the credit, you must retain a balance in an ORP account and be receiving a periodic distribution. Read more about the health insurance credit.
Virginia Department of Taxation changes how it pays refunds
The Virginia Department of Taxation is changing how individual tax refunds are issued. This cost-cutting measure provides two options for receiving your tax refund – a direct deposit into your bank account or a prepaid refund debit card. Requesting refund checks is no longer an option. For more information, visit www.tax.virginia.gov/debitcard.
Q: What is the difference between Plan 1 and Plan 2?
A: You are in Plan 1 if your membership date was before July 1, 2010 and you were vested (you had at least five years of service credit) as of January 1, 2013. You are in Plan 2 if your membership date was before July 1, 2010 and you were not vested as of January 1, 2013, or your membership date was on or after July 1, 2010.