VRS Glossary

Members are active if they are working in a covered position with an employer that participates in the Virginia Retirement System (VRS) or are covered under an optional retirement plan (ORP) administered by VRS. Covered employment is a full-time permanent, salaried position. Some part-time permanent, salaried state positions also are covered under VRS.

Active service is the number of years the member works in a covered position. Members earn one month of service credit for each month they are employed (in service).

Members may need long-term care if they cannot perform at least two of the following activities of daily living: bathing; transferring, such as getting in and out of bed; dressing; toileting (using the bathroom); continence; or eating (ability to feed oneself).

Actuarial equivalent cost represents the amount of money needed in today's dollars to pay for the total value of the increase in the member's future retirement benefit or earlier retirement eligibility date resulting from purchasing prior service. If members purchase prior service after the two-year approximate normal cost window, the cost will be actuarial.

An Approved Domestic Relations Order (ADRO) is a court order related to marital property rights and other attachments to member benefits, such as child support, at the time of divorce. If a member divorces, their VRS benefits may be regarded as marital property in a property settlement.

Approximate normal cost is the average cost of one year of VRS service credit. The cost is based on a percentage of the member's creditable compensation or average final compensation at the time of purchase, whichever is higher.

Average final compensation is one of the factors used to calculate a retirement benefit. For Plan 1 members, it is the average of the member's 36 consecutive months of highest creditable compensation as a covered employee. For Plan 2 and Hybrid Retirement Plan members, it is the average of their 60 consecutive months of highest creditable compensation as a covered employee.

A bona fide break in service is a break of at least one full calendar month from the member's retirement date over a period he or she normally would work. Periods of leave with or without pay do not count toward satisfying this break in service. For retired teachers and faculty members, summer breaks, intersession periods, educational leave and sabbaticals also do not count toward satisfying this break.

A catastrophic condition means the member is unable to perform at least two of the following activities of daily living without substantial assistance: bathing, transferring (getting in and out of bed), dressing, toileting (using the bathroom), continence and eating (ability to feed oneself). The member's condition also may be considered catastrophic if he or she has a severe cognitive impairment and requires substantial supervision or is placed in a guardianship.

As defined by the U.S. Bureau of Labor Statistics, the Consumer Price Index-Urban measures the average change over time in the prices paid by urban consumers for goods and services, such as food, housing, apparel, transportation, medical care, recreation, education, communication and other goods and services.

Covered employment is a full-time permanent, salaried position with an employer that participates in VRS or in an optional retirement plan. Some part-time permanent, salaried state positions are also covered under VRS.

Creditable compensation is the member's current annual base salary excluding overtime; extraordinary pay; bonus pay; housing and moving expenses; mobile device and internet costs; vehicle allowances; termination pay for leave; non-permanent shift differentials; payments of a temporary nature including but not limited to acting pay (if not permanently confirmed for the position); or payments for extra duties, such as pay for teachers who serve as coaches. A member's election to defer salary to a deferred compensation plan, such as a 403(b), a 457(b) or a 125 plan, may only be included in creditable compensation if the member voluntarily elects the deferral, the deferral is not conditional or performance based, and the deferral would otherwise be included in the member's gross income. Other exclusions apply.

Members are considered deferred members if they have left covered employment but have not withdrawn their funds and have service credit in VRS or an account balance in a Virginia optional retirement plan.

The defined benefit component under the Hybrid Retirement Plan provides a retirement benefit based on the member's age, total service credit and average final compensation at retirement. VRS manages the investments and related risk for member and employer contributions under this component.

The retirement plan under VRS is a defined benefit plan for Plan 1 and Plan 2 members. This plan provides a monthly benefit during retirement based on age, total service credit and average final compensation.

The defined contribution component of the Hybrid Retirement Plan provides a retirement benefit based on member and employer contributions and net investment gains on contributions. Members manage the investments and related risk for this component.

The benefit under a defined contribution plan is based on contributions and net investment earnings on these contributions. The defined contribution plans administered or authorized by VRS include the Commonwealth of Virginia 457 Deferred Compensation Plan, the Virginia Cash Match Plan, the defined contribution component of the Hybrid Retirement Plan, optional retirement plans for selected employees and a supplemental plan for certain school employees.

Hazardous duty employees who retire with at least 20 years of hazardous duty service credit may be eligible to receive a supplement to their retirement benefit. The supplement is a dollar amount added to the monthly benefit payment. It continues until normal Social Security retirement age for state police officers and political subdivision employees eligible for enhanced hazardous duty coverage. It continues until age 65 for Virginia law officers under the 1.7% retirement multiplier. Virginia law officers under the 2.0% multiplier are not eligible for the supplement.

Members are covered under the Hybrid Retirement Plan if their membership date is on or after January 1, 2014. This includes judges elected or appointed to an original term on or after January 1, 2014, regardless if vested to VRS Plan 1 or VRS Plan 2. Members are not eligible to participate in the hybrid plan if they are a member of SPORS, VaLORS or a political subdivision covered by enhanced benefits for hazardous duty employees or the hazardous duty alternate option. Members hired on or after January 1, 2014, and eligible for an Optional Retirement Plan must elect the ORP or the VRS Hybrid Retirement Plan. Members with prior service under Plan 1 or Plan 2 are not eligible to elect the hybrid plan and will choose between the ORP or the applicable VRS defined benefit plan.

A major chronic condition is a life-threatening health condition that exists over a prolonged period of time and is not expected to improve.

Membership is based on the date the member is first reported to VRS in a covered position. If members have previous VRS service but took a refund, their membership is the date they return to covered employment.

For members who qualify for primary Social Security benefits, the minimum guaranteed benefit will be equal to 33 1/3% of their average final compensation. They will receive the minimum guaranteed benefit or the full VRS formula amount, whichever is higher. For members who do not qualify for primary Social Security benefits, the minimum guaranteed benefit will be equal to 50% of their average final compensation. They will receive the minimum guaranteed benefit or the full VRS formula amount, whichever is higher.

Non-covered employment is a part-time position with a VRS-participating employer. Non-covered positions do not provide eligibility for benefits. Part-time positions typically require 80% or less of the hours of comparable full-time permanent positions. Some full-time positions may be considered non-covered if they are temporary and require 80% or less of the hours per year that would be considered full-time and permanent for that position.

If there is no valid beneficiary designation on file or your beneficiary is deceased at the time of your death, VRS is required by law to pay benefits according to an order of precedence.

Members are covered under Plan 1 if their membership date is prior to July 1, 2010, and they were vested before January 1, 2013, and have not taken a refund. Members are covered under Optional Retirement Plan 1 if they have an ORP membership date before July 1, 2010. If a member has a pre-July 1, 2010, ORP account balance and moved to a defined benefit plan, they must have any combination of VRS service credit and/or ORP participation that totals five years as of January 1, 2013, to be considered a Plan 1 member.

Members are covered under Plan 2 if their membership date is from July 1, 2010, to December 31, 2013, and they have not taken a refund. Additionally, members are covered under Plan 2 if they have a membership date prior to July 1, 2010, but they were not vested before January 1, 2013. Members are covered under Optional Retirement Plan 2 if they have an ORP membership date on or after July 1, 2010. If a member is covered under VaLORs, SPORS or VRS with enhanced hazardous duty benefits or the hazardous duty alternate option, and their membership date is on or after July 1, 2010, they are in Plan 2, even if their membership date is after December 31, 2013.

A retiree is no longer employed in a covered position and is receiving a retirement benefit from VRS.

A retirement multiplier is a factor that determines how much of your average final compensation will be used to calculate your defined benefit at retirement. Retirement multipliers for VRS plans can be found in the corresponding member handbook.

Service credit is credit for service earned as a VRS defined benefit member. Members earn service credit for each month they are reported in a covered position. Service credit also may include credit for prior service a member may have purchased or additional service credit granted by an employer. Service credit is one of the factors used to calculate the VRS retirement benefit and determine eligibility for retiree benefits.

The number of years that can be used to enhance the member's VRS retirement benefit.

The amount the member may receive as a severance benefit when not using the additional service credit toward a VRS retirement benefit.

Members become vested in VRS when they have at least five years of service credit. Vesting is the minimum length of service needed to qualify for a future retirement benefit, if they meet the age and service requirements for their plan, or to receive any contributions made by the employer to the member contribution accounts after July 1, 2010, should they leave covered employment and request a refund.

Service represented by a refund of member contributions and interest is called refunded service. If members leave covered employment, take a refund and return to covered employment, they can purchase their refunded service and add it as credit toward their plan.