Background information from Judy McConville -
As teachers we all had to contribute to the Virginia Retirement System. The money contributed was to be used as defined pensions for teachers and state workers. Recent events, however, on the state level, have created a situation of which all members of the VRS should be aware.
According to recent Roanoke Times articles (published June 23-August 23, 2015), from 2010 to 2012, the state did NOT contribute to VRS funds as promised. The state agreed to pay back the money with interest over ten years. In 2015, the state contributed $193 million to the teacher retirement fund. The state will NOT pay interest on the loan as promised. The recent $193 million payment leaves the state owing the VRS $313.2 million. In addition, during the fiscal year 2015, the VRS investment return was 4.6%, NOT the 7% that had been projected.
VRS has now stated that an incentive pay plan is necessary to hire and retain highly qualified investment staff. These investment managers are compensated as much as 30% above targeted levels. Remember, the investment staff are state employees. The seven top paid Virginia state employees were VRS officials!! The highest paid VRS employee in fiscal year 2015 had a base salary of $382,500 plus the incentive plan, which provided a salary of $930,913! I have a chart showing VRS salaries, base plus incentive which will be available online and at the October meeting. It is interesting to note that the Governor of Virginia is paid $175,000 per year while the President of the United States is paid $400,000! How much money did you make the last year YOU taught?
Edwin Burton, a former member of the VRS Board for 17 years, an economics professor at the University of Virginia “and longtime critic of its investment strategies, said the retirement system would need fewer people and generate higher returns if it simply invested more in US stocks indexed to public equity and securities funds.” (Roanoke Times, August 23, 2015). By using Burton’s measures, the VRS investments have underperformed averaging 10% annual returns over the last three years. S&P % average was 17.3%! Why is the VRS Board receiving such high salaries for such poor performance?
The Roanoke Retired Teachers Association has created a petition which they would like all retired teachers throughout the Commonwealth to sign. The petition states that Virginia retired teachers object to the bonus formula designed by the VRS Board themselves, a formula which creates excessive incentive plans. The VRS Board members are state employees, not managers of hedge funds, and should not be compensated as such.
VRS participants are encouraged to print and sign the following statement and mail it to Judy McConville, 8515 Revere Court, Annandale, VA 22003.
Demand for Revision of Bonus Formula for Virginia Retirement System
Investment Managers Fall 2015
We, the undersigned retired teachers of the Commonwealth of Virginia and members of the Virginia Retirement System (VRS), object to the excessive incentive plan, the total monies paid to the Virginia Retirement Investment Managers for the 2015 year, and the bonus formula that will grant them similar payments in the future. We think that VRS Retirement Managers enjoy the many benefits of being an independent agency of the Commonwealth and that this far outweighs the argument that bonuses should be comparable or more than those in private financial investment brokers. We think VRS needs a revision of the current bonus formula, that there should be transparent supervision from the General Assembly, and that yearly reports should include a comparison of VRS investments to that of other comparable public stock and bond indexes. As teachers of the Commonwealth, we were not given a choice or the option to opt out of belonging to VRS, and we contributed faithfully to make our retirement financially secure. We request that our hard earned life-time savings be treated with the same spirit in which they were earned.
As teachers we all had to contribute to the Virginia Retirement System. The money contributed was to be used as defined pensions for teachers and state workers. Recent events, however, on the state level, have created a situation of which all members of the VRS should be aware.
According to recent Roanoke Times articles (published June 23-August 23, 2015), from 2010 to 2012, the state did NOT contribute to VRS funds as promised. The state agreed to pay back the money with interest over ten years. In 2015, the state contributed $193 million to the teacher retirement fund. The state will NOT pay interest on the loan as promised. The recent $193 million payment leaves the state owing the VRS $313.2 million. In addition, during the fiscal year 2015, the VRS investment return was 4.6%, NOT the 7% that had been projected.
VRS has now stated that an incentive pay plan is necessary to hire and retain highly qualified investment staff. These investment managers are compensated as much as 30% above targeted levels. Remember, the investment staff are state employees. The seven top paid Virginia state employees were VRS officials!! The highest paid VRS employee in fiscal year 2015 had a base salary of $382,500 plus the incentive plan, which provided a salary of $930,913! I have a chart showing VRS salaries, base plus incentive which will be available online and at the October meeting. It is interesting to note that the Governor of Virginia is paid $175,000 per year while the President of the United States is paid $400,000! How much money did you make the last year YOU taught?
Edwin Burton, a former member of the VRS Board for 17 years, an economics professor at the University of Virginia “and longtime critic of its investment strategies, said the retirement system would need fewer people and generate higher returns if it simply invested more in US stocks indexed to public equity and securities funds.” (Roanoke Times, August 23, 2015). By using Burton’s measures, the VRS investments have underperformed averaging 10% annual returns over the last three years. S&P % average was 17.3%! Why is the VRS Board receiving such high salaries for such poor performance?
The Roanoke Retired Teachers Association has created a petition which they would like all retired teachers throughout the Commonwealth to sign. The petition states that Virginia retired teachers object to the bonus formula designed by the VRS Board themselves, a formula which creates excessive incentive plans. The VRS Board members are state employees, not managers of hedge funds, and should not be compensated as such.
VRS participants are encouraged to print and sign the following statement and mail it to Judy McConville, 8515 Revere Court, Annandale, VA 22003.
Demand for Revision of Bonus Formula for Virginia Retirement System
Investment Managers Fall 2015
We, the undersigned retired teachers of the Commonwealth of Virginia and members of the Virginia Retirement System (VRS), object to the excessive incentive plan, the total monies paid to the Virginia Retirement Investment Managers for the 2015 year, and the bonus formula that will grant them similar payments in the future. We think that VRS Retirement Managers enjoy the many benefits of being an independent agency of the Commonwealth and that this far outweighs the argument that bonuses should be comparable or more than those in private financial investment brokers. We think VRS needs a revision of the current bonus formula, that there should be transparent supervision from the General Assembly, and that yearly reports should include a comparison of VRS investments to that of other comparable public stock and bond indexes. As teachers of the Commonwealth, we were not given a choice or the option to opt out of belonging to VRS, and we contributed faithfully to make our retirement financially secure. We request that our hard earned life-time savings be treated with the same spirit in which they were earned.
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