The Virginia Retirement Svstem (VRS) has announced that approximately 120,000 state and local government retirees may have to pay their share of $528.7 million in VRS overpayments according to a report in the Virginia Association of Counties newsletter (VaCo.org)
VaCo’s Beau Blevins reports that the overpayment is the result of a mistake made over the past three years by VRS’s actuary in calculating the 2009 cost of living adjustment (COLA). The mistake happened when the actuary calculated the COLA that took effect Jan. 1, 2009. The calculation is based on the month-to-month increase in consumer price indexes from the previous
This calculation resulted in a 3.8 percent increase in the consumer price index. However, the COLA should have been 3.4 percent since VRS matches the increase by half above three percent mark.
The difference in these percentages resulted in overpayment of $528.9 million to almost 120,000 active retirees or their survivors. The average overpayment amount is expected to be around $240 and only affects individuals who retired before 2009.
Next month, according to Blevins, the VRS board of trustees will have a recommendation by the Benefits and Actuarial committee that the system should recover all of the overpaid funds. The board will decide whether to recover these overpayments from actual retirees or from the actuarial company that made the mistake. Provided the board approves the committee’s recommendation, VRS would begin collecting the money through group life insurance policies.