Virginia Retirement System trustees approved broad asset allocation targets of 70% stocks, 25% fixed income and 5% real estate. The $31.2 billion Richmond-based systems previous targets were 70% equity and 30% fixed income. The current asset allocation is 46.1% domestic stocks, 15.2% international stocks, 24.5% fixed income, 6.5% private equity, 2.6% high yield bonds and 5.1% real estate.
Michael Carter, a senior consultant at Gabriel, Roder, Smith & Co. and the systems actuary, also warned the system is "virtually certain to be underfunded for the fiscal year ending June 30, though no estimate was given. He added there is only a 25% probability that the system will return to fully funded status during the next two decades. The system was 116% funded as of June 30, 2001, the latest figure available.
Because of the decline in the funded status, the state will need to sharply increase contributions to 12% of pay or more over the long term to fully fund the system, according to a report by Mr. Carter. The expected contribution is 2.37% for fiscal 2003 and 3.77% for fiscal 2004.