Virginia Government Finance Officers’ Association 2011 Spring Conference Virginia Retirement System Update for Local Go

1. Virginia Government Finance Officers’ Association2011 Spring Conference Virginia Retirement System Update for Local Government June 10, 2011 Barry C. Faison, Chief Financial Officer

2. Agenda • Profile of VRS Members • Funding the Benefit • 2011 Legislation Review and Contribution Rates • Pension Reform Initiatives • VRS Modernization

3. Profile of VRS Members

4. VRS Overview • VRS is the 22nd largest public or private pension system in the U.S. • There are almost 600,000 members, retirees and beneficiaries.

5. VRS Total Membership As of December 31, 2010

6. Active Members

7. Retirees

8. Benefit Comparison Information obtained from the June 30, 2010 Actuarial Valuation.

9. Funding the Benefit

10. Funding VRS Benefits C + I = B + E C = Contributions I = Investment Income B = Benefits Paid E = Expenses (administration) Bdepends on: Cdepends on: - Plan Provisions - Short-term: Actuarial assumptions - Experience Actuarial cost methods - Long-term: I, B & E • 68% of VRS benefit costs funded by investment earnings • 32% of VRS benefit costs funded by employee/employer contributions

11. Net Assets Available for Benefits Estimate as of 12/31/2010

12. Asset Allocation As of April 5, 2011

13. VRS Fiscal Year Returns

14. Funded Status: Teacher and Local Plans 2010 Valuation Assumptions: 7.00% assumed rate of return 2.50% inflation & 20-year amortization period

15. 2011 LegislationReview and Contribution Rates

16. 2011 Legislation

17. Member Contributions

18. Employer Contributions Teacher Contribution Rates Local Contribution Rates – No change

19. Pension Reform Initiatives

20. Pension Reform Efforts in VA

22. Modernization Program Goals Provide more online tools and services for employers, members and retirees Streamline business processes Replace 20-year-old technology infrastructure and eliminate costs to maintain it Increase VRS and employer staff efficiency while maintaining superior customer service to a growing population

23. myVRS Navigator • Builds on the familiarity you already have with myVRS • Will replace the current tools you use today, such as the PC Package and WebER • Will be Web- and Windows-based

24. Changes to Employer Reporting • You will submit new employees and employee data changes only • Using the data you reported, myVRS Navigator will calculate: • employees’ creditable compensation and service credit • member and employer contributions • purchase of prior service costs • You will confirm contribution amounts and authorize your payment

25. Modernization Timeline • Summer 2011 • Employer pilot • Fall 2014 • Implementation of myVRS Navigator for members and retirees, including: • Online retirement application • Online refund application • Early 2012 • Employer batch certification begins • Employer training begins • March 2012 • Implementation of myVRS Navigator for employers, including: • Online enrollment and data maintenance • Contribution remittance • Contacts management • VRS-calculated creditable compensation and contributions Dates and activities may be added or adjusted as the program progresses.

26. Keeping You Informed

27. Keeping You Informed • Webinars archived at www.varetire.org

28. Thank you!