Last Updated on March 2, 2023 by George
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Teachers in Virginia are eligible for retirement benefits through the Virginia Retirement System. Depending on age and years of service, teachers in the Commonwealth may qualify for full retirement benefits at different points in their careers. The age of 60 with at least five years of service, any age with at least 30 years of service, and a rule of 80 when the sum of your age and years of service equals or exceeds 80 entitles you to full retirement benefits.
Teachers in Virginia are an integral part of the Virginia Retirement System (VRS), established in 1942. Rather than the traditional defined benefit (DB) pension plan, new teachers since 2014 have been enrolled in the Virginia Hybrid Retirement Plan, a combination of a traditional DB pension and a defined contribution (DC) plan. Those who don’t utilize the hybrid plan may fall under one of two statewide pension plans: Plan 1 or Plan 2, depending on their hire date and if they vested by the end of 2013. Regardless of the plan they belong to, benefits are determined using a formula based on experience and final salary rather than returns from investments in their pension component plans.
How Does Virginia’s Hybrid Plan Work?
Since 2014, teachers enrolled in Virginia’s Hybrid plan must contribute at least 4% of their yearly income to the defined benefit element of the fund, with employer contributions decided annually by an actuary. The overall value of a teacher’s DB plan is determined at retirement using a formula based on years of experience and final average wage.
There is also a defined contribution (DC) component to the plan, in which instructors contribute 1 percent of their salaries and employers contribute 1 percent annually.
The state offers an optional 457 Deferred Compensation Plan to which teachers may voluntarily pay up to 4 percent, with employers matching contributions up to 2.5 percent. Under the Hybrid plan, teachers vest for the DB portion after five years of service, while they award gradually for the DC portion: 50% after two years, 75% after three, and 100% after four. Imagine, after two years, a teacher leaves or moves out of Virginia.
In this situation, they can access all of their contributions and fifty percent of their employer’s contributions to their DC account but none of their employer’s DB account.
How is the DB Portion of Virginia’s Hybrid Plan Calculated?
In Virginia, pension wealth is calculated using a formula. The figure below illustrates the calculation. The state must determine the highest 60 consecutive months when determining the final salary. For example, a teacher working 25 years with a final average salary of $70,000 would be eligible for an annual pension benefit worth 25 percent of their final salary. However, it is essential to remember that this only pertains to the DB part of the Hybrid plan–not their full retirement benefit.
Calculating Teacher Pension Wealth in Virginia
1% Multiplier  X Avg. Highest 60 consecutive months of salary X Years of service
Who Qualifies for the Pension Portion of Virginia’s Hybrid Plan?
Like most states, teachers in Virginia must serve a certain number of years before they are eligible for a pension. New hires participating in the Hybrid fund have a five-year vesting period before they qualify for the pension portion. However, it may be worth little and can only be accessed once the teacher reaches the state’s retirement age.
The state determines when teachers can retire with benefits based on their age and years of experience, such as full benefits at their average five years of service and a combined age of 90. In addition, Virginia permits early retirement beginning at age 60 for those with at least five years of experience, resulting in lower compensation.
How Much Does Virginia’s Pension System Cost?
When working, teachers and their employers must contribute to the plan, with rates set by the state legislature that can change year-to-year. In 2018, teachers contributed 4 percent of their salary to the pension part of the Hybrid plan, while employers contributed 13.36 percent of each teacher’s salary.
However, not all this investment goes towards benefits–only 4.5 percent of the state contribution goes toward teacher benefits, while 8.86 percent goes toward addressing the plan’s unfunded liabilities. As is often the case with state pension funds, the most significant benefits are earned by those who stay for more extended periods in Virginia’s Hybrid plan–so teachers should think carefully about their career plans and how they work with its retirement system.
Glossary of Financial Terms
Vesting Period
The minimum number of years a teacher must work to be qualified for a pension. Although vesting periods vary by state, they typically last five years. Every state allows teachers who quit their positions before they are vested to withdraw their contributions, sometimes with interest. However, just a few jurisdictions permit these workers to receive any employer contributions made on their behalf.
Contribution of Employees
Each year, the percentage of teachers’ salaries they contribute to the pension fund.
Employer Contribution
The proportion of a teacher’s annual income that the state, a school district, or both contribute to the pension fund.
Average Cost
The annual retirement benefit expense is expressed as a proportion of teacher pay, and these costs do not include debt.
Frequently Ask Questions
What is the Virginia Teachers Retirement System?
The Virginia Teachers’ Retirement System (VTRS) is the defined benefit pension plan for all teachers in the Commonwealth of Virginia who are employed by any local school board, regional education program, or charter school. It offers qualified members a secure source of retirement income and other benefits.
What types of retirement plans are offered?
VTRS offers three kinds of teacher retirement plans: Traditional DB Plan, Pension Plus 2 Plan, and Defined Contribution Plan. Each program provides different levels of benefits and contributions.
Who can participate in the Virginia Teachers Retirement System?
All full-time teachers employed by any local school board, regional education program, or charter school in the Commonwealth are eligible to join VTRS. Part-time teachers may be qualified if they meet specific criteria by Virginia law.
How does a teacher join VTRS?
Teachers must apply for membership with their employing school board or regional education program within 60 days of starting employment to join VTRS. A designated representative from your school board will help you complete the paperwork necessary to become a member.
How much money must I contribute to my monthly retirement account?
Members enrolled in the Traditional DB Plan or Pension Plus 2 Plan contribute 8% of their monthly salary plus 1% interest on past service credit toward their retirement account each month. In contrast, members enrolled in Defined Contribution Plans make voluntary contributions on their terms.
Pros & Cons
Pros                                                    
Pros for Virginia teachers’ retirement:
- Contributions from both employers and teachers are going towards teachers’ benefits.
- Retirement window with five years of experience or 90 combined age and years of service.
- Early retirement option available at age 60, with reduced benefits.
Cons                                                    
Cons for Virginia teachers’ retirement:
- Not all investment goes towards benefits–only 4.5 percent of the state contribution goes toward teachers’ gifts, while 8.86 percent is used to address unfunded liabilities.
- A pension may be less than expected when vested after five years.
- Most significant rewards are only available to those who stay in the system for long periods.
Final Thought – Virginia Teachers Retirement
Virginia teachers’ retirement is essential to consider when making career plans. While the hybrid system offers teachers some security and benefits, it’s necessary to understand how contributions are allocated, and the conditions of early and full retirement to ensure their pension will be worthwhile in the long run.
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