US - The US$45bn Virginia Retirement System (VRS) will raise its contribution rates, despite recently announcing record market value levels in its fiscal 2005 report.
The VRS board of trustees announced a contribution rate increase for 76% of the 561 entities participating in the system.
According to the fiscal report, the VRS achieved a 12% return, and said the market value of its investment portfolio had reached “record levels,” with all five of the funds’ asset classes achieving a positive return.
While the contribution rates for 24% of the entities would remain unchanged or decline, Paul Timmreck, chairman of the VRS, said the increase marked a return to the rates the localities experienced during the 1980s, before the stock market boom years of the 1990s.
Timmreck attributed the rise to, among other things, a weak market environment from 2001 to 2003, and employers providing enhanced benefits to employees or providing pay increases over projections.
Lower estimates of future investment gains (7.5% vs 8% annually) and lower estimates for inflation (2.5% vs 3%), were another factor, he said.
The new rates will become effective July 1, 2006.
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