subject: Employees Get More Flexibility With Changes In Vrs Investments [print this page] Virginia Retirement System (VRS) brings in a lot of benefits for the employees. It provides employees with a monthly benefit that is proportional to the age, it provides a total service credit to the employee and it also makes him avail the final compensation at retirement.
Recently changes have been brought into this system which will allow the employees to invest with different levels of interest and they will be able to manage their own savings account.
The work of modification was initiated in 2007 itself with an intension of making retirement plan better for private sector employees.
Robert P. Schultze, Director of Retirement System says, The intent is to streamline investment choices and reduce some of the anxiety many people have in trying decide how to invest their retirement assets.
As of now the employees had the option of investing in defined schemes but now they will have the flexibility of making investments according to their choices and requirements.
The new program will come into effect from January 1, 2012 and would include the teachers too. It will be a unique combination of a hybrid plan of retirement which will ensure that mandatory contributions are made to the plans and State and Local employees choose an investment plan of their need as well.
Schultze also says, By making all of these changes, we feel like were really getting ready for the hybrid plan.
According to a report, more than 90% of the employees have chosen to be auto enrolled and have stayed back in the plan. Here they have to pay an employee contribution of $20. These employees had the option of coming out of the plan and making their own investments.
The new set of changes will evaluate the portfolio of the investor to assess the risk and growth of the logged in money.
In this regard Schultze says, That we, we feel participants have an optional portfolio allocation as they advance in age toward their retirement date without doing anything.
Jordan, Executive Director of Virginia Governmental Employees Association says, Its clear that the intent is to make it easier for unsophisticated investors to let VRS handle their money with assurance theyre doing it in an extremely competent manner and at a low cost.
Jordan also expresses that This is a part it and forget it option with more of the element of user friendly. Employees have the option of making investments of their choice else they can seek the help of experts for putting their money in the right place. They would be given as many as 11 investment options which will have funds ranging from high risk and high gains to low risk and low gains.
Employees will also have the option of putting their money into shares which will be managed by retirement system itself.
IF they feel more comfortable putting their money into brokerage account for a more aggressive growth, they can even do that.
Their investments will be managed by renowned capital Management Companies like BlackRock and J.P. Morgan. For managing their investments these companies will be charging a minimum amount of fee as processing fee.
