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Virginia Retirement System fund surpassed benchmarks

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(The Center Square) — The Virginia Retirement System trust fund is outperforming other similar large public pension plans from other states, according to a report.

The Joint Legislative Audit and Review Commission recently presented a report to its General Assembly members on VRS investment benchmarks.

Members are familiar with information covered in VRS Oversight reports staff presents at least once a year. However, they wanted to know more about how investment benchmarks were selected for the fund.

“During JLARC staff updates on VRS in recent years, members have asked questions related to VRS’s investment benchmarks, including how the benchmarks are determined and how VRS investment performance compares to other public pension plans,” according to the report.

JLARC found that VRS’s trust fund “generated a return of 7.7 percent over the 10-year period ending December 31, 2023,” exceeding its assumed long-term rate of return of 6.75%. VRS’s largest asset class, public equity, didn’t perform as well as expected, but several other asset classes did, including private equity, real assets, credit strategies and fixed-income asset classes. Their performance more than compensated for any public equity losses.

Private equity didn’t perform as well in 2023, though, generating only a 6.4% return when the benchmark was 20.7%.

Over a 10-year period ending in June 2023, the fund’s absolute return of 8.2% was higher than the median return of 7.9% compared to other states with similarly sized public pension plans.

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