Video: 2021 Investment Return
VRS leadership team provides an investments update.
As managers of the VRS Trust Fund, the investment team knows that decisions made today must support current and future needs of Virginia’s teachers, local government workers and state employees.
VRS collects contributions from Virginia's public employees and their employers.
VRS invests those contributions to maximize returns while managing risk.
VRS pays a monthly benefit to retirees.
To fulfill our mission of delivering benefits through sound financial stewardship, VRS strategically manages the trust fund to maximize returns while mitigating risk.
With a focus on long-term returns and performance, the VRS Board of Trustees, governed by the Code of Virginia, sets the portfolio policy. Our professional investment team executes the board’s policy through external investment manager selection, active management of in-house portfolios and active management of overall investment exposures. Those efforts have resulted in about $2.5 billion in additional dollars for the fund over the past 10 years.
Other contributions to the fund come from members and employers:
These funds are invested to pay for future benefits. Currently, VRS pays approximately $5.5 billion annually to retirees and beneficiaries.
Source: Bank of New York Mellon
Diversification creates a stable foundation and helps moderate risk associated with the stock market. By mixing stocks, bonds, real assets and other investment strategies, VRS creates a diverse portfolio, which also minimizes significant fluctuation in the rates that employers pay into the fund.
Current Investment Return Assumption: 6.75%
*2001-2003: Tech bubble burst; **2008-2009: Great Recession
VRS focuses on performance over the long term, 20 to 40 years, not simply a single year. Over short periods (monthly, quarterly and even a few years), some asset classes will do well, while others will underperform.
The VRS Board of Trustees, with the expertise of an outside consultant, sets the assumed rate of return, annualized over 30 years. The board also sets the VRS benchmark to measure performance of each investment type within the portfolio. The portfolio is positioned to match the long-term needs of VRS members. Investing solely in the stock market, S&P Index or other indices would lack diversification necessary to support the future needs of VRS retirees and their beneficiaries.
By balancing risk with reward in the portfolio, the VRS fund is projected to grow steadily over time, meeting or exceeding the assumed rate of return.
The net position of the VRS Trust Fund reflects resources available to pay benefits. Approximately two-thirds of benefit payments come from investment earnings.
In addition to a long-term investment strategy, VRS implements other policy and legislatively driven measures to ensure the long-term health of the fund:
VRS delivers retirement and other benefits to Virginia public employees through sound financial stewardship and superior customer service.