How to Ensure You’re Fully Prepared for Hybrid Rate Separation

April 2024
An alarm clock and a checklist in front of a sphere with a large crack running through it

VRS will simplify the way employer contributions are calculated and paid in the Hybrid Retirement Plan, beginning July 1. Payroll withholding for the defined contribution component will be independent from the defined benefit component.

Your monthly snapshot will change, and it’s important to consider any impacts on your internal processing.

How Can You Prepare for July 1?

  1. Identify reconciliation issues and coordinate with VRS to resolve them. Strive to stay current with reconciliations leading up to rate separation. VRS’ Defined Contributions Plan unit is currently emailing employers with unresolved reconciliation issues to help identify and clear accounts.
  2. Disable any programming or calculations that link the defined benefit and defined contribution employer rates.
  3. Ensure your payroll system can calculate defined contribution amounts with every payroll since your monthly snapshot will no longer be a reference.
  4. Use historical data to budget for the employer defined contribution match. You will reconcile the defined contribution amounts withheld from employees’ paychecks to the amounts remitted to MissionSquare Retirement each pay period.
  5. Budget for a fixed defined benefit rate for all employees, including hybrid plan members. You can access your FY 2025-2026 rate letters in myVRS Navigator.

What Resources Are Available?

VRS is providing before-and-after snapshot comparison reports (for January, February and March as they become available) to show the defined benefit contributions separated from the defined contribution component for hybrid plan members. The example reports are based on current employer contribution rates versus July 1 rates.

Refer to the Snapshot Comparison Report job aid (login required) for tips on how to interpret your monthly comparison report.

Register for an Employer Help Session. Get direct assistance from VRS team members as you work with the Snapshot Comparison Reports.

Visit the hybrid rate separation webpage for additional background.