The Virginia Retirement System (VRS) Board of Trustees

Retiree VIRGINIA RETIREMENT SYSTEM COLA Effective July 1: 3.08 Percent VRS Board Approves Recommendations for 2009 COLA Overpayment The Virginia Retirement System (VRS) Board of Trustees earlier in the spring announced a cost-of-living adjustment (COLA) of 3.08 percent effective July 1, 2012. The increase will appear in the August 1 benefit payment of eligible retirees. In addition, at its June 21 meeting, the VRS Board approved a set of recommendations to address an error VRS recently discovered in how the COLA for 2009 was calculated by the VRS actuary. Under the statutory formula, retirees were entitled to a COLA in 2009 of 3.42 percent. However, the VRS actuary incorrectly calculated the COLA as 3.84 percent. The incorrect COLA was applied to retirees benefits effective July 1, 2009 and appeared in their August 1, 2009 benefit payments. The recommendations approved by the VRS Board include: The gross benefit amount for retirees who received an incorrect COLA of 3.84 percent in 2009 will be recalculated to reflect the correct COLA of 3.42 percent for that year. VRS will then apply the COLAs for 2010, 2011 and 2012 to this adjusted amount. These actions will take care of the error in 2009 and provide the affected retirees a correct benefit amount going forward. In addition to adjusting the gross benefit amount, VRS is required to recover the amount of overpayments made to retirees from 2009 to present. VRS will retain the overpayment for each retiree from the retiree s life insurance amount before any payment is made. When spreading the overpayment over the number of retirees and beneficiaries who received the incorrect COLA, the cumulative overpayment averages $239 per individual over the three-year period. Summer 2012 Vol. 11, No. 1 In This Issue 2 2012 Legislation Will Not Affect Current Retirees 3 Your Direct Deposit Schedule through December 4 Are You Eligible for the Health Insurance Credit? 5 Keep Track of Your Benefits Through myvrs 6 Money Matters: Need to Brush up on Your Financial Savvy? 7 Social Security and Other Federal Benefits to be Paid Electronically Starting Next March 7 VRS to Upgrade Its Systems October 25 November 5 Need forms, publications or more information about your benefits? If you have access to the Internet, you can find all the forms, publications and benefit information you need on the VRS website at www.varetire.org. If you do not have a personal computer or a way to access the Internet, the resources and information in this newsletter are still available to you. Just call VRS toll free at 1-888-VARETIR (1-888-827-3847). Continued on page 7

2 RETIREE NEWS Summer 2012 2012 Legislation Will Not Affect Current Retirees The 2012 session of the General Assembly passed legislation that will change retirement provisions for current and future members of the retirement system. None of the changes will affect current retirees. The General Assembly also passed a new mandatory hybrid retirement plan for members hired on or after January 1, 2014. A 2012 Legislative Summary is available on the VRS website at www.varetire.org. VRS VRS Counseling Center Has Moved Changed Your Name Recently? Complete a Name and Address Declaration for Retirees (VRS-58). Include proof of your name change, such as a marriage license, divorce decree or court order. VRS cannot accept drivers licenses or Social Security cards as proof of a name change. Send your completed form and documentation to VRS at P.O. Box 2500, Richmond, Virginia 23218-2500. Your name will be updated in approximately 30 days. You can find the VRS-58 on the VRS website at www.varetire.org. The VRS Retirement Counseling Center has moved a block away from VRS administrative offices at 1200 East Main Street to 1111 East Main Street in the Bank of America Pavilion, which faces East Main Street. The new location offers more counseling space, and the first hour of parking is free if you park in the Bank of America deck. Directions and a map to the center and the parking deck are available at www.varetire.org. Or call 1-888-VARETIR (1-888-827-3847). VRS administrative offices are staying at 1200 East Main Street. S.10TH ST. E. CANAL ST. N.10TH ST. VRS Counseling Center E. CARY ST. E. MAIN ST. CAPITOL SQUARE S.12TH ST. N.12TH ST. S.13TH ST. N.13TH ST. E. MAIN ST. BANK ST. N.14TH ST.

RETIREE NEWS Summer 2012 3 Your Direct Deposit Schedule through December VRS deposits your monthly benefit payment to your account at your bank or financial institution on the first day of the month for the preceding month s benefit. If the first day of the month falls on a holiday or weekend, VRS deposits your benefit on the last business day of the preceding month. Payment for the month of: Deposited on: August August 31 September October 1 October November 1 November November 30 December December 31 How to Change Your Direct Deposit Information If you change your account or financial institution, submit an Authorization for Direct Deposit of Monthly Benefit (VRS-57), available at www.varetire.org, to VRS as soon as possible. This is a fillable form, which you can complete online, then print, sign and mail to VRS. Attach a voided check with your new account information. You also can call VRS toll free at 1-888-VARETIR (1-888-827-3847) to request a direct deposit form. The change takes at least 30 days. Do not close your old account until your deposit begins in your new account. You can look up your deposit information in myvrs. If you are not registered, go to www.varetire.org and select myvrs Access, then Retirees Register. VRS Moving? VRS sends your annual 1099-R income tax form, the Retiree News and other important information to you throughout the year to your mailing address. If you move, complete and submit a Name and Address Declaration for Retirees (VRS-58) to VRS, or write a letter to VRS requesting an address change. Include your name, Social Security number, new address and signature in the letter. You also may use the Change of Address Request form furnished by the post office. Be sure to include your Social Security number and sign the card before sending it to VRS. VRS

4 RETIREE NEWS Summer 2012 Are You Eligible for the Health Insurance Credit? If VRS is not deducting your health insurance premiums from your monthly benefit payment and you are not receiving the health insurance credit, you may be eligible to apply for it. This is a tax-free benefit that assists with health insurance premiums you pay for single coverage, excluding any portion of the premiums covering a spouse or dependents. You qualify for the health insurance credit if you retired from an employer that offers the program and had at least 15 years of service credit at retirement or you retired on disability. Eligible retirees include: State retirees Retired teachers and administrative school employees Retired general registrars and their employees, constitutional officers and their employees and local social service employees Retired employees of political subdivisions that have elected to offer the health insurance credit The credit is applied to your retirement benefit payment. If you do not receive a monthly payment, VRS will send you a check for the amount each month. The health insurance credit ends upon your death. Applying for the Health Insurance Credit If you are eligible for the health insurance credit and VRS is not deducting your health insurance premiums, complete and send a Request for Health Insurance Credit (VRS-45) to VRS. The form is available on the VRS website at www.varetire.org. Select Forms from the left column of any page. Or call VRS at 1-888-VARETIR (1-888-827-3847) to request the form. If you are eligible for the health insurance credit and VRS is deducting your health insurance premiums, you do not need to apply for it. It already is being applied to your monthly benefit payment. You can look up the amount through myvrs (see Keep Track of Your Benefits on the next page). Qualifying Health Plans Individual health plans Coverage as a dependent on a spouse s plan (the health insurance credit is based on your portion of the health insurance premium) Employer-sponsored health plans, including the State Retiree Health Benefits Program Medicare Part B Dental and vision plans Prescription drug plans, including Medicare Part D The following plans are not eligible for the health insurance credit: Coverage for specific conditions or to treat a specific illness, such as cancer insurance Hospital indemnity policies that pay a daily amount for each day spent in the hospital Long-term care insurance Long-term disability insurance Life insurance

RETIREE NEWS Summer 2012 5 Keep Track of Your Benefits through myvrs What are my benefits? The answers are at your fingertips. Through myvrs, you can: See when VRS transferred your retirement payment for deposit to your financial institution and confirm your financial institution account information. See your COLAs and income tax deductions. Change your income tax withholdings. Review your health insurance coverage, health insurance premiums and health insurance credit amount, if applicable. View your life insurance coverage. Print income verification information. Print tax documents for income tax filing purposes. If you are not registered for myvrs, go to www.varetire.org and select myvrs Access, then Retirees Register. Assistance with myvrs: Select myvrs Help from the bottom of any screen for general information. Select Explain this Page from the top right for help on a particular screen. If you get locked out, call VRS toll free at 1-888-VARETIR (1-888-827-3847). For additional questions, call VRS or email myvrs@varetire.org. Important email notice: Do not send confidential or personal information, such as your Social Security number, by email even when you are logged into your account. VRS will email only non-confidential replies. VRS will use the U.S. Postal Service to send all replies containing confidential information directly to your mailing address. How VRS Protects Your myvrs Account Information VRS is committed to protecting the security and privacy of your online account. The information in your myvrs account is encrypted, which ensures that no one but you has access to your account information. In addition, VRS does not sell your information to anyone. Information is shared only with third-party administrators, such as Minnesota Life which handles group life insurance for VRS, authorized to help coordinate benefits and services for VRS members, retirees and beneficiaries. Steps you can take to protect your identity: Do not close your browser to log-out of myvrs. Always select Log-Out from the top right area of the page. Never give anyone your myvrs username and password. Avoid using the same password for myvrs that you use to access other secure systems, such as your online bank account. Change your password regularly. Never send personal or confidential information through email, even when you are logged into your online account. VRS will send only nonconfidential replies. If you store printed copies of your online account, do so securely. Never use publicly shared computers to access secure systems.

6 RETIREE NEWS Summer 2012 Money Matters: Need to Brush up on Your Financial Savvy? Need a refresher on the basics of finances? VRS developed the following e-courses, available on the VRS website, on Money Matters for Virginians. The courses are free and available to everyone. They take you through: Banking finding the best account for you; the different types of electronic banking; what s best a savings account, money market or CD? Credit what your credit score means; interest rates and what affects them; how to read your credit report; how to make sure your credit report is accurate; how to improve your credit score. Taxes understanding tax brackets; figuring your withholding amounts; how to reduce your taxable income; filing taxes; how long to keep different tax records. Investments the types of asset classes and advantages and risks of each one; stock characteristics; bonds; cash equivalents such as CDs, money market accounts, real estate holdings and their advantages and risks; the importance of allocation and the advantages of diversification; rates of return. Financial Planning determining your net worth; how to set short-, mid- and long-term goals; preparing for the unexpected; protecting yourself and your family through life and health insurance, disability protection and long-term care. Home Finance types of mortgages; equity and refinancing; when to use an equity loan and when to use an equity line of credit. The Money Matters for Virginians courses cover everything from banking to home finance to investing. These courses are available on the VRS website at www.varetire.org. Is Your Beneficiary Designation Up to Date? Remember to update your beneficiary if you have had a personal change such as a change in marital status or an addition of a new member to your family. VRS is required to pay benefits according to the latest beneficiary designation in your record. To change your beneficiary, submit the Designation of Beneficiary (VRS-2) to VRS. The form is available at www.varetire.org; select Forms from the left column of any web page. Or you can call VRS at 1-888-VARETIR (1-888-827-3847) to request a form. If you need to find out who you have currently as beneficiary, write to Minnesota Life, P.O. Box 1193, Richmond, VA 23218-1193. Neither VRS nor Minnesota Life can provide your designation over the phone.

RETIREE NEWS Summer 2012 7 Social Security and Other Federal Benefits to be Paid Electronically Starting Next March Beginning March 1, 2013, the U.S. Department of the Treasury will begin paying all federal benefit and non-tax payments, such as refunds, electronically. If you re applying for federal benefits, such as Social Security or Veterans Affairs benefits, you will choose to receive the benefit by direct deposit to your bank or credit union account or via a prepaid debit Direct Express Debit MasterCard card. If you are currently receiving federal benefit checks, such as Social Security, you must switch to electronic payments by March 1, 2013. If you do not choose an electronic payment option by March 1, 2013, or at the time you apply for federal benefits, you will receive your payments via the Direct Express card so you will not experience any interruption in payment. If you already receive federal benefit payments electronically, you do not need to take action. You will continue to receive your payment as usual on your payment date. To sign up or learn more, visit www.godirect.org or call 1-800-333-1795. VRS Source: U.S. Department of the Treasury, Financial Management Service COLA Effective July 1, Continued from page 1 The VRS actuary will pay approximately $1 million to VRS for overpayments that cannot be recovered. For survivors of deceased retirees, overpayments will be recovered by an actuarial reduction in their monthly payment. In addition, certain members on long-term disability (LTD) in the Virginia Sickness and Disability Plan (VSDP) will be subject to the same adjustment to their benefit to correct for the 2009 COLA as well as retention of the overpayment from life insurance. For those LTD participants without life insurance, a similar actuarial reduction will be applied. VRS deeply regrets that this error occurred. However, we are attempting to make adjustments that will have the least impact on the retiree. In addition, we are instituting new safeguards into the annual COLA process that will prevent this error from occurring in the future, said VRS Director Robert P. Schultze. A news release on the VRS Board s action and information on the COLA are available on the VRS website at www.varetire.org. VRS If You Received the Incorrect 2009 COLA You should receive a letter from VRS informing you of the adjustment to your gross benefit amount for the correct 2009 COLA and how much this amount will be after the 2012 COLA is applied. The letter also will provide the amount of your overpayment to be deducted from your life insurance proceeds. VRS to Upgrade Its Systems October 25 November 5 VRS is making upgrades to its systems to better serve you in the future. What this will mean to you: You will receive your benefit payment on time. Direct deposit will not be affected. If you need assistance, you will be able to call VRS toll free at 1-888-VARETIR (1-888-827-3847). However, response times may be delayed. Also, you will not be able to use the automated Interactive Voice Response (IVR) system (option 2 from VRS toll-free telephone number) during the systems upgrade. myvrs will not be available during this period.

Virginia Retirement System P.O. Box 2500 Richmond, Virginia 23218-2500 PRSRT STD US Postage PAID Richmond, VA Permit No. 457 8 RETIREE NEWS Summer 2012 Learn About Your DCP Options At a Meeting Near You VRS and ING, the record keeper for the Commonwealth of Virginia 457 Deferred Compensation Plan, have scheduled 2012 Regional Education Meetings throughout Virginia. The session, Retirement Distribution Strategies, is specially designed for 457 Plan participants who are retired or nearing retirement. The meetings are open to those who participate in the Commonwealth s 457 Plan. The meetings are free and registration is not required. Topics cover distribution options and taxes. Presenters are available following the afternoon session for individual questions. Director Robert P. Schultze Public Relations Director Jeanne L. Chenault Communications and Marketing Manager Elaine Jones Editor Kathleen A. Dimond Virginia Retirement System P.O. Box 2500 Richmond, Virginia 23218-2500 Toll Free: 1-888-VARETIR (1-888-827-3847) TDD: 1-804-344-3190 E-mail: vrs@varetire.org Website: www.varetire.org For session dates and locations, call 1-VRS-DCPLAN1 (1-877-327-5261) and choose Option 2, or go to the VRS website at www.varetire.org and select the Defined Contribution Plans tab, then Commonwealth of Virginia Deferred Compensation Plan (457) from the drop-down menu.