VRS Board Supports Governor McDonnell's Proposed Budget Recommendation

Dec 16, 2010, 17:16 ET from Virginia Retirement System

RICHMOND, Va., Dec. 16, 2010 /PRNewswire-USNewswire/ -- Today, the Virginia Retirement System (VRS) Board of Trustees expressed its appreciation to Governor McDonnell for his plan to increase contribution rates to the VRS pension plans by $300 million in fiscal year 2012. These increased contribution rates represent a 56 percent increase over currently budgeted levels for the state employee plan and a nearly 20 percent increase for the teacher plan.

The Governor also proposes to require employees to share in the cost of their retirement program.  This will put the VRS plan into alignment with public and private plans across the country and will ease the burden on state and local employers in funding the escalating costs of the program.

"The VRS Board of Trustees welcomes the Governor's proposal to provide an increase in contribution rates, especially during these difficult economic times when state revenues are still below pre-recession levels and the future of reliable investment returns continues to be uncertain," said VRS Board Chairman Diana F. Cantor.

This past summer, the VRS Board lowered its long-term investment return assumption used for actuarial valuations from 7.5 percent to 7 percent, believing this represents a realistic appraisal of long-term returns.  However, by lowering the assumption, future contribution rates will need to increase in order to maintain the fiscal soundness of the fund.

"We look forward to future efforts of sustained budget support to restore the VRS trust fund to more actuarially sound levels," said Cantor.

SOURCE Virginia Retirement System