Employer Update

At its October meeting, the VRS Board of Trustees voted to certify contribution rates for the five statewide retirement plans and the associated other post-employment benefits (OPEB):

• State employees.
• Teachers.
• State Police Officers’ Retirement System (SPORS).
• Virginia Law Officers’ Retirement System (VaLORS).
• Judicial Retirement System (JRS).
• OPEB plans include group life insurance, the health insurance credit and the Virginia Sickness and Disability Program (VSDP).

Pending approval by the governor and General Assembly, the certified employer contribution rates for the retirement plans and associated OPEBs will go into effect July 1, 2022.

Due largely to VRS’ strong fiscal year 2021 investment return of 27.5%, the contribution rates for the upcoming biennium for both the state and teacher plans are lower than the rates paid for fiscal years 2021 and 2022. The teacher rate further benefited from an infusion of $61.3 million to pay off the balance of deferred contributions a year ahead of schedule.

Meanwhile, contribution rates for JRS, SPORS and VaLORS increased slightly for various reasons, including changes in demographics and plan assumptions.

Contribution rates for group life insurance, the state employee health insurance credit and VSDP will decrease in fiscal years 2023-2024. The contribution rate for teacher health insurance credit will remain unchanged.

VRS bases employer contribution rates on actuarial valuations and a plan experience study conducted every four years.

The June 30, 2021, valuation conducted by Cavanaugh Macdonald Consulting LLC highlights a number of factors that influenced contribution rates:

• Changes in actuarial assumptions for the plans, such as members living longer.
• Stronger than anticipated VRS investment return.
• Greater than anticipated demographic changes (more than expected numbers of employees leaving employment and fewer hires, for instance).

Later this month: The VRS board will certify contribution rates for the political subdivision plans, the Virginia Local Disability Program (VLDP) and the Line of Duty Act (LODA). In late January 2022, VRS will send actuarial reports, including the retirement contribution rate, to all political subdivisions, along with rates for the health insurance credit, if applicable. Employer contribution rates provided for non-professional school board and political subdivision plans, including VLDP and the health insurance credit for political subdivisions, are final once certified by the VRS board.

December: The governor will present a 2023-2024 budget, including a recommendation regarding the funding of the VRS-certified contribution rates for statewide plans and other post-employment benefits.

Spring 2022: Final VRS contribution rates will be available at the conclusion of the General Assembly session next spring.