(The Center Square) – Virginia Retirement System officials told lawmakers Monday the agency’s state employee and teacher pension plans remain on track to reach about 90% funding by 2030, while a required actuarial audit found the system’s funding methods and contribution calculations to be reasonable.
The update came during a Joint Legislative Audit and Review Commission oversight meeting. Under the Code of Virginia, JLARC oversees the retirement system through semiannual reports on the system’s investments, governance and management, as well as a required actuarial audit every four years.
Retirement System Director Trish Bishop said the state employee retirement plan was about 85.4% funded and the teacher retirement plan was about 85.5% funded as of June 30, 2025. She said both plans are projected to reach about 90% funding by 2030 and full funding by about 2043 if current assumptions are met.
As part of JLARC’s oversight, lawmakers also received the results of the required four-year actuarial audit. The audit found VRS’ actuarial assumptions, funding methods and contribution calculations were reasonable and recommended several technical improvements, including refinements to cost-of-living adjustment calculations, mortality assumptions, funding parameters and financial disclosures.
JLARC Associate Director Kimberly Sarte told lawmakers the retirement system trust fund has continued to outperform the board’s long-term assumed annual return of 6.75% over the long term, helping reduce pressure for higher employer contribution rates. She said recent underperformance against investment benchmarks over the one- and three-year periods was largely driven by private equity investments, while longer-term performance remained strong.
Bishop said investment earnings now fund nearly two-thirds of retirement benefit payments, while consistent employer contributions approved by the General Assembly have strengthened the system’s financial position.
The General Assembly also approved the board-recommended employer contribution rates for the current biennium and provided nearly $94 million for the state retiree health insurance credit program. Bishop said the additional funding is expected to improve the program’s funded status from about 41% to about 60%, assuming investment earnings meet expectations.
Officials also highlighted continued growth in the hybrid retirement plan’s defined contribution component. Bishop said about 94% of hybrid plan members now make voluntary contributions, but many continue contributing only the minimum amount. She said more frequent automatic contribution increases and automatic enrollment at higher contribution levels could improve retirement savings but would require action by the General Assembly.
