Employer Update

A new fiscal year brings new legislation, changes in retiree COLAs and important updates to VRS resources and websites.

Which New Laws Affect VRS?

See the 2025 Legislative Summaryto view new laws that affect VRS-administered benefits, plans and programs, including:

• Disability benefits for emergency dispatchers.
• Virginia Law Officers’ Retirement System membership for conservation officers.
• Retirement allowance changes for judges effective in 2026.

Cost-of-Living Adjustments Take Effect July 1

The following cost-of-living adjustments (COLAs) take effect July 1 for eligible retirees in Plan 1, Plan 2 and the Hybrid Retirement Plan (defined benefit component).

• 2.95% for Plan 1
• 2.48% for Plan 2 and the Hybrid Retirement Plan

Eligible retirees will see the COLA amount in their August 1 benefit payment.

Virginia Sickness and Disability Program (VSDP)
Members receiving long-term disability benefits under VSDP for at least one calendar year will see a:

• 4.00% increase in their creditable compensation.
• 2.95% (Plan 1) or 2.48% (Plan 2 and Hybrid Retirement Plan) cost-of-living adjustments to their benefit payments.

Virginia Local Disability Program (VLDP)
Members receiving long-term disability benefits under VLDP for at least one calendar year will see a:

• 4.00% increase in their creditable compensation if they retire directly from long-term disability.

Life Insurance
$9,768 is the new minimum beginning July 1 (an increase of 2.48% over the previous year for retirees with at least 30 years of service credit).

Hazardous Duty Supplement
$17,856 beginning July 1 and paid monthly beginning August 1 ($1,488 per month).

Updates to Handbooks and Websites

VRS will make updates to member handbooks and websites, as is typical for July 1. If you have printed handbooks and guides on hand, they will soon be out of date (except for the VRS Member Guide). Refer to the Publications section of the VRS website for up-to-date editions. You may order printed copies of the VRS Member Guide, which is designed for new hires. Other handbooks and guides are available on the VRS website for employees to view or download.

Secure Act Requirements Affect Certain Catch-Up Contributions

Beginning January 1, 2026, employers participating in the Commonwealth of Virginia 457 Deferred Compensation Plan will need to manage age-based catch-up contributions differently for high-earning employees.

The federal SECURE 2.0 Act (Section 603) requires that age-based contributions for employees who made at least $145,000 in the prior year be made as after-tax contributions (Roth). Section 603 does not apply to contributions made under the standard catch-up provision.

Participating employers will need to monitor wages paid to participants in the Commonwealth of Virginia 457 Plan. If their pay exceeds the $145,000 threshold, then only after-tax contributions will be allowed as age-based catch-up contributions.

Voya is developing a process to help ensure age-based contributions are submitted in compliance with Section 603. Look for more communication around the change later in the year.