As part of their September 22nd meeting, the Virginia Retirement System (VRS) Board of Trustees received the report of the Chief Investment Officer (CIO), Ronald Schmitz which included a performance summary of the various asset classes managed by VRS as well as an overview of economic indicators, among other business. The good news is that for the period ending on July 31st, 2022 Total Fund Fiscal and Calendar year to date performance met or exceeded benchmarks. VRS achieved a 0.6% return, net of fees, on its investment portfolio for fiscal year 2022. The portfolio ended the year with approximately $101.2 billion. The health and well-being of VRS is important to local governments as it administers retirement programs and other benefit programs for state and local government employees, including teachers. VRS receives funds from employer contributions, employee contributions, and investment income.
Troublingly, CIO listed a variety of factors that cast uncertainty on future global and national economic trends. These include but are not limited to the ongoing war in Ukraine contributing to high food and energy prices, China’s zero-COVID policy disrupting global supply chains, the growing number of economists predicting a recession in 2023, and the fact that despite these trends there remain two job openings for every employee position. As seen in the past, any major economic downturns could impact VRS rate of return, which in turn could eventually impact employer contribution rates.
The Trustees also received a report from Mike Heale, Head of Business Development at CEM Benchmarking the FY 2021 Pension Administration Benchmarking results. This report is a fiduciary tool for understanding how VRS costs and service levels compare to peer retirement systems in North America of a similar size. Overall, VRS scores above peer systems in administration cost and member service.
VRS serves more than 751,000 actives and retired members. Based on assets, VRS is the 17th largest public and private pension systems in the United States, and 46th largest in the world. VRS was created on July 1, 1942, and is celebrating 80 years of service this year. The full Board of Trustees document from meeting can be found here.
VACo Contact: Jeremy R. Bennett