Virginia Retirement System, Richmond, returned an estimated 18.5% on its investments in the fiscal year ended June 30, according to preliminary figures presented Monday to the state's Joint Legislative Audit and Review Commission.
Fund assets hit $54.9 billion as of March 31, nearing the 2007 high of $58.3 billion.
Diana Cantor, VRS board chairwoman, told the panel that while she was pleased with the performance, “the investment department continues to face a challenging financial environment” and contribution levels will need to be increased.
“Our highest priority now is to restore contributions to actuarially prudent levels in the next budget cycle,” she said.
On June 25, state employees began paying 5% contributions, but most other employers in the system will continue making the full contributions.
In 2010, the board adopted a 7% rate-of-return assumption, from the 7.5% rate used from 2005 to 2009. The board will certify its rate of return in the fall after hearing from its actuary at its October meeting. Currently, 66% of benefit costs are funded by investment earnings, VRS Director Robert Schultze told the panel.
Official figures will be released in mid-August after validation is complete, spokeswoman Jeanne Chenault said.
