Most statewide pension plans improved their funded status in fiscal year 2026, according to the June 30 actuarial valuation from Gabriel, Roeder, Smith & Company, the VRS plan actuary. The valuation was presented to the VRS Board of Trustees at its October 15 meeting. Actuarial valuations are conducted annually to assess plan funding and experience, helping determine future funding requirements.
In comparing the funded status of the pension plans against the previous year’s data, the valuation found year-over-year gains.
Funded Status for Statewide Pension Plans:
- State plan: 85% funded, up from 83%
- Teacher plan: 84% funded, up from 83%
- State Police Officers’ Retirement System: 75% funded, up from 74%
- Virginia Law Officers’ Retirement System: 75% funded, unchanged
- Judicial Retirement System: 90% funded, up from 88%
The actuary also reviewed the performance of the group life insurance program, the health insurance credit for state employees and teachers, and the Virginia Sickness and Disability Program.
Funded Status for Other Post-Employment Benefit Plans:
- Group life insurance: 79% funded, up from 75%
- State health insurance credit: 48% funded, up from 41%
- Teacher health insurance credit: 32% funded, up from 27%
- Virginia Sickness and Disability Program: 263% funded, up from 252% (overfunded due in part to historical plan design changes and favorable plan experience)
No Change to Current Rates
These results do not affect current employer contribution rates. Even-year valuations are provided for informational purposes only. The next valuation, as of June 30, 2027, will be used to recommend rates for the following biennium.
Investment Return Exceeds Long-Term Assumption
VRS earned 12.1% for the fiscal year, well above its 6.75% long-term assumption. Investment performance, whether up or down, is a major driver of employer contribution rates over time. For example, the strong FY 2026 investment return helped accelerate the funded status improvements of the pension and OPEB plans. Investment earnings also play a critical role in funding benefits, accounting for approximately two-thirds of VRS pension benefit payments.
Cash Infusions, Consistent Funding Have Reduced Plan Shortfalls
Under current actuarial assumptions, VRS’ two largest pension plans, the state and teacher plans, are projected to reach a funded status of 95% by 2031, assuming investment returns meet or exceed the current assumed rate of return over the next five years.
In recent years, the General Assembly has consistently funded VRS board-recommended employer contribution rates. The state also has provided additional cash infusions to further reduce unfunded liabilities for retirement and OPEB plans. Since FY 2013, Virginia lawmakers have reduced the plans’ unfunded liabilities by nearly $2 billion through additional plan funding.
At its October meeting, the VRS Board of Trustees also approved a funding policy change for pension and OPEB plans funded above 100%. Under the policy, surplus assets will be amortized using an open amortization method that gradually reduces employer rates while preserving a portion of the surplus to help offset future market downturns.
Looking Ahead
The December Employer Update will include a recap of actuarial valuations for the separately rated political subdivision retirement plans, the health insurance credit program for political subdivisions, the Line of Duty Act Fund and the Virginia Local Disability Program.
In January, employers will have access to their informational valuations in myVRS Navigator.
