RICHMOND, Virginia — The Virginia Retirement System's return on its investments lagged in the fiscal year that ended June 30.
The retirement system with more than $68 billion in assets earned a 4.6 percent return on investment income, below the 7 percent annual return it relies upon to help fund state and local employee pensions.
System leaders reported on the return of investment during its annual presentation Monday to the Joint Legislative Audit and Review Commission, the Richmond Times-Dispatch (http://bit.ly/1JeegbZ ) reported.
Hopes of reaching the 7 percent mark faded in June when the stock market swooned in response to Greece's financial mess, said Ronald D. Schmitz, the retirement system's chief investment officer.
The system funds pensions of more than 342,000 active employees and 184,000 retirees, among others. The return on investments is used to set pension contribution rates for state and local government employees, including teachers.
The teacher retirement fund will receive a $193 million boost from the revised state budget that took effect July 1. The budget also includes an additional $32 million contribution to retirement plans VRS administers for state employees, state police and other law officers, and judges.
The accelerated payments' short-term effect will be to raise the rates the state pays for those pension obligations. But the state is expected to save $85 million over the next 20 years.
"Putting more money in early will ultimately reduce the pressure on rates," Patricia S. Bishop, the retirement system's director, told legislators.
The retirement system has earned an average 10 percent return over the past three years and just under 7 percent in the past 10 years. A year ago, it posted a 15.7 percent return on investments.
Information from: Richmond Times-Dispatch, http://www.timesdispatch.com