Categories: Financial Planning

The Virginia Retirement System (VRS)

Helping You Plan for Tomorrow, Today

About VRS

The Virginia Retirement System (VRS) is an independent agency of the Commonwealth of Virginia.
The Virginia Retirement System (VRS) manages defined benefit (Plan 1), defined contribution (Plan 2), and hybrid plans along with other benefits for Virginia public sector employees. It serves over 706,000 people. All full-time educational, administrative, or operations staff (monthly- paid) are members of the VRS. After five years of eligible service, you become vested to this system.
VRS provide separate plans for different employer groups (school divisions, state, state police, other state law enforcement agencies, and the state judicial system).

VRS administers three retirement plans:

Plan 1 for those who were hired or rehired before July 1, 2010, and vested* as of January 1, 2013. It is benefit plan where the benefit is based on the member`s age, creditable service and average final compensation at retirement using a formula.
* You will become vested when you have at least five years (60 months) of service. Vesting means the minimum period of service required to qualify for service retire. You are also must be vested in order to receive a full refund of the balance of your member contribution account balance if you quit your job and request a refund.
Plan 2 for those who were hired or rehired on or after July 1, 2010, or were hired or rehired before July 1, 2010 and were not vested as of January 1, 2013. It is benefit plan where the benefit is based on the member`s age , creditable service and average final compensation at retirement using a formula.
The Hybrid Plan is a combination of the features of Plans 1 and 2. The plan applies to most members who were hired or rehired after January 1, 2014, and were not vested as of January 1, 2014.

How does Virginia retirement system work?

If you are in Plan 1 or Plan 2, you are contributing 5% of your salary monthly toward retirement. These contributions are at your member contribution account which accrues 4% interest annually. Your employer makes a separate contribution to the VRS for all insured employees. VRS invests contributions to ensure that your benefits are paid in the future. When you retire, your benefit is initially paid from your member contribution account. Once this amount is depleted, your benefit will be paid from a separate contribution that your employer makes to VRS plus earnings. Your contributions are tax-deferred until you withdraw them as part of your retirement benefit or as refunds.
If you’re in the Hybrid Plan, 4% of your salary each month is placed in your member contribution account. Your account accrues 4% interest, compounded annually. Your employer makes a separate contribution to the VRS for all covered employees. VRS invests contributions to provide a portion of the defined retirement benefit. In addition, 1% of your salary each month, together with a mandatory contribution of 1% of your employer, is credited to your defined contribution account.

Its important all VRS members are secured from the first day of employment by Basic Group Life Insurance Securian Financial (Minnesota Life Insurance).

This insurance covers 2 times your salary for natural death and 4 times your salary for accident death. Through the Optional Group Life Insurance Program you are also eligible to purchase additional life insurance for yourself as well as your spouse and dependent children. If you opt for this additional coverage you will be able to pay the premiums through payroll deductions.

About myVRS

myVRS is a secure, online way to look up your benefits. By using your retiree account you will be able to view the amount of your monthly benefit payment and other up-to-date information such as you tax withholdings and your VRS Group Life Insurance coverage, if applicable.
myVRS enhanced features:

• Improved benefit estimator – allows members to experiment with different hypothetical retirement dates and payout options to see how each scenario affects VRS benefits in retirement.

• New retirement planner – allows members to add other sources of income and expenses to a benefit scenario to help project a more complete financial picture.

• New financial wellness content – offers budget calculators, articles, videos, and mini-courses to help members grow their financial knowledge and improve their money skills.

• Integration of myVRS retiree accounts – provides one unified myVRS system serving members and retirees.
• Online retirement (coming soon) – will allow members to complete their retirement application online through myVRS.

Visit the myVRS website at https://www.varetire.org to log in with your username and password and take advantage of these new features. VRS is commited to provide security and privacy of your information. No one but you has access to your myVRS account.

Riley Allen

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