Following up on Jim’s recent post about the WMATA pension problems, I decided to check on the recent performance of the Virginia Retirement System. Now that I get a monthly check from these folks, my interest is more active than in the past.
Analysis of pension plans is out of my league, but there is a recent report that does create some concern and even I understand it. VRS is required by statute to conduct periodic stress tests. The latest one was released in December. For those who are interested in digging into the weeds, here it is . Toward the end of the report, the authors point out that VRS lost about 25% of its value in the first couple of years of the Great Recession. They warn that, if there is another great shock or even a period of a few years of returns lower than needed, the plan would be in a worse position to absorb the shock than it was in 2009. The Free Lance-Star had a good summary of the issue in this editorial.
In summary, to keep VRS able to meet its pension obligations, the General Assembly needs to continue its recent practice of paying down the plan’s unfunded obligations.There are currently no comments highlighted.