US - The US$45bn Virginia Retirement System (VRS) board of trustees has raised contribution rates to 7.33% for state employees and 11.18% for Virginia teachers.
The higher rate becomes effective from July 1, 2006 through June 30, 2008, and will be submitted to the governor by the VRS board.
Contribution rates are included in the budget, and will be reviewed and approved during the 2006 General Assembly session, said VRS chairman Paul W. Timmreck.
“These rates represent an increase over the previous biennium, and a return to contribution rates that were common in the 1980s, before the stock market boom years of the 1990s.”
Timmreck pointed to a number of reasons for the hike, such as a weak market environment from 2001 through 2003, and recognition of investment gains and losses over a five-year “smoothing” method.
Lower estimates of future investment gains (7.5% vs. 8.0% annually) and lower inflation rates (2.5% vs. 3.0%), as well as certified board rates not being fully funded in recent years were also factors, he said.
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