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VRS Overview

Jan 05, 2016

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VRS Overview. Virginia Governmental Employees Association. Robert P. Schultze, VRS Director September 13, 2014. Agenda. VRS Overview Investments Summary Questions. VRS Overview. VRS Total Membership. As of July 31, 2014. *Inactive/deferred members as of June 30, 2014. - PowerPoint PPT Presentation

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VRS OverviewVirginia Governmental Employees AssociationRobert P. Schultze, VRS DirectorSeptember 13, 2014AgendaVRS OverviewInvestmentsSummaryQuestions#VRS OverviewVRS Total MembershipPlan 1Plan 2Hybrid TotalTeachers101,19643,0471,105145,348Political Subdivisions66,78335,6022,887105,272State Employees52,77123,1932,40678,370State Police Officers Retirement System (SPORS)1,52048802,008Virginia Law Officers Retirement System (VaLORS)5,5583,85409,412Judicial Retirement System (JRS)317690386Total Active Members228,145106,2536,398340,796As of July 31, 2014Total Active MembersRetirees/BeneficiariesInactive/Deferred MembersVRS Total Population340,796180,880126,243*647,919**Inactive/deferred members as of June 30, 2014#Benefit ComparisonState TeachersLocalActives: Average Age48.345.246.3 Average Service12.811.911.1 Average Salary$48,972$48,994$41,287Retirees: (in FY 2013) Avg. Age @ Retirement63.061.862.1 Avg. Service @ Retirement22.623.319.9 Avg. Benefit @ Retirement38.4%39.6%34.7% Avg. Annual Benefit$20,441$23,116$15,367 Avg. Social Security Benefit at Age 62$18,252$17,640$14,640 Information above obtained from the June 30, 2013, Actuarial Valuation.#Funds Flow (estimated)Beginning Balance July 1, 2013$58.4Contributions$3.1Net Investment Income$9.0Total Additions $12.1Total Deductions ($4.4)Net Additions$7.7Ending Balance July 1, 2014$66.1Cash Flow (contributions minus deductions)$(1.3)For the Fiscal Year Ended June 30, 2014 #Net Assets Available for BenefitsFiscal Year#8Funded Status: State EmployeesAssumptions: Fiscal Year 2014 investment return estimated at 15.7%. Other projected years investment returns assume 7.0% with 2.5% inflation rate. Assets estimated at actuarial value of assets (five-year smoothing).

Projected Funded Status using Market Value of Assets (New GASB Standard)Projected Funded Status using Actuarial Value of Assets (Funding Standard)New GASB Accounting Rules will reflect funded status using Market Value of Assets effective 6/30/14 for plan reporting and 6/30/15 for employer reporting.8Estimated VRS Employer Contribution RatesEstimated Contribution Rates by Fiscal Year2013-142015 & 20162017 & 20182019 & 2020State8.76%12.33%12.04%11.96%Teachers11.66%14.50%14.58%15.00%Added cost to achieve the 2015/2016 contribution rate increases is approximately $315 millionfor the biennium in General Funds.Fiscal Year 2014 investment return estimated at 15.7%.Above contribution rates are net of employee contributions.General Assembly committed to phase-in contribution rates for the teacher and state plans to the VRS board-certified rates as follows:July 1, 2012July 1, 2014July 1, 2016July 1, 2018State67.02%78.02%89.01%100%Teachers69.53%79.69%89.84%100%#InvestmentsVRS Fiscal Year ReturnsFiscal Year#Fund PerformanceVRS Return(As of June 30, 2014)3-year9.5%5-year12.3%10-year7.4%15-year6.1%20-year8.8%25-year8.7%#VRS Asset Allocation as of June 30, 2014(Dollar Amounts in Billions/Percent of Total Fund)

#Retirement Resources

Retirement Preparedness in U.S. HouseholdsNew study on financial preparedness of pre-retirees (Wharton Pension Research Council) in the U.S. found the following:Roughly half of U.S. households are unlikely to maintain their pre-retirement standards of livingCompared to prior generations of retirees, current pre-retirees are less prepared for the following reasons:People are living longerHealthcare costs have risen dramaticallySocial Security is less generous401(k) plans have replaced defined benefit plans#Retirement PlanningMore than 38 million U.S. working-age households do not have retirement accounts. (NIRS Feb. 2014)Employees really need to be saving up to 15% of pay for 30 to 40 years to have a sufficient nest egg for retirement. Christine Marcks, president of Prudential RetirementOverall, 75% of Baby Boomers say tax deferral is an important trait of a retirement investment. Insured Retirement Institute (IRI) When they go through a retirement income calculation, 20% of participants increase the amount they contribute by five percentage points, from 4% to 9%. Turning up the deferral rate at age 32 or 33 can have a profound impact. Thats the powerful moment of truth for them, says Marcks. February 21, 2014 (PLANSPONSOR.com)

#Retirement Resources at VRSVisit www.varetire.org and set up a myVRS accountBenefit EstimatorFinancial PlannerReview your Member Benefit Profile (MBP)Register for group seminars or one-on-one consultationsView a video on your plan; view Financial Matters video seriesReview your plan member handbook and Getting Ready to Retire Guide

#SummaryUpcoming Issues2015 General Assembly Session and 2014-16 BudgetMaintain adherence to commitment to fund the plan in the budgetPension Reform Is Still Alive and WellOther states: several states still are in the midst of pension reformVirginia: Hybrid plan implemented and plan used as a model for other states

#Upcoming IssuesPension AccountingGASB pension rules go into effect in 2014 for VRS and in 2015 for employersGASB just issued draft Other Post-Employment Benefit (OPEB) rulesContribution RatesState and teacher contribution rates now expected to remain flat, a significant decrease over prior years projections

#Questions?