Hybrid Retirement Plan Presentation for Members …

1 1/27/20141 Hybrid Retirement plan Presentation for MembersOverviewDefined Benefit PlanDefined Contribution plan provides a monthly benefit funded by you and your employer primarily funded by you balance based on contributions, investment results and associated fees21/27/20142 EligibilityMost current plan 1 and plan 2 employees of state agencies, school divisions and political subdivisions are eligible to opt into the Hybrid Retirement PlanOpt in window: January 1 April 30, 2014 Effective date: July 1, 20143 Employees Not Eligible to Opt-inSPORS, VaLORS and political subdivision employees with enhanced hazardous duty benefitsCurrent ORP participants Current judges41/27/20143 Deferred EmployeesDeferred employees who return to work during the opt in window may elect to opt in to the Hybrid Retirement PlanDeferred employees who return to work after the opt in window remain in VRS plan 1 or plan 2 5 AgendaThings to ConsiderHybrid plan CalculatorContributionsICMA RC61/27/20144 Things to Consider7 Irrevocable DecisionThe decision to opt into the Hybrid Retirement plan is irrevocable after April 30, 201481/27/20145 Purchase of Prior ServicePlan 1 plan 2 Hybrid Retirement Plan5% cost rate within 3 year eligibility windowapproximate normal cost (VRS ; judges ) within 1 year eligibility windowapproximate normal cost (VRS.)

2 Judges ) within 1 year eligibility windowactuarial equivalent cost after 3 year eligibility windowactuarial equivalent cost after 1 year eligibility windowactuarial equivalent cost after 1 year eligibility window5% refunded service5% refunded service4% refunded service**Certain provisions as described are subject to pending technical legislative amendments9Ve s t i n g10 Defined BenefitDefined Contribution5 years of serviceEmployee contributions:vested 100%Employer contributions*:2 years participation 50%3 years participation 75%4 years participation 100%*The General Assembly will consider legislation this year to have your previous service count towards vesting for the defined contribution component. 1/27/20146 Average Final CompensationPlan 1 plan 2 Hybrid Retirement Plan36 highest consecutive months of creditable compensation60 highest consecutive months of creditable compensation60 highest consecutive months of creditable compensation**Certain provisions as described are subject to pending technical legislative amendments11 Retirement Eligibility plan 1 plan 2 Hybrid Retirement plan *Unreduced Retirement65/5 or 50/30 Social Security Normal Retirement age/5or Rule of 90 Social Security Normal Retirement age/5 or Rule of 90 Reduced Retirement55/5 or 50/1060/560/5*Certain provisions as described are subject to pending technical legislative amendments121/27/20147 Social Security Normal Retirement AgeYear of BirthNormalRetirement AgeYear of BirthNormal Retirement Age1937 or earlier65 years195566 + 2 months193865 + 2 months195666 + 4 months193965 + 4 months195766 + 6 months194065 + 6 months195866 + 8

3 Months194165 + 8 months195966 + 10 months194265 + 10 months1960 or later67 years1943 5466 years13 Defined Benefit MultipliersPlan 2 Transferees:Service prior to 1/1/13 1/1/13 6/30/14 after 7/1/14 1% plan 1 Transferees:Service prior to 7/1/14 after 7/1/14 1%141/27/20148 Defined Benefit Payout Options:Basic BenefitSurvivor OptionAdvance Pension OptionPartial Lump Sum Option PaymentPayout & Distribution OptionsDefined Contribution Distribution Options:Total or partial lump sumAnnuity paymentsPeriodic paymentsPartial lump sum with remainderas periodic payment or annuityRollover to other qualified plan15 Cost of Living AdjustmentPlan 1 plan 2 Hybrid Retirement PlanMaximum COLAof 5%Maximum COLA of 3%Maximum COLAof 3%**Certain provisions as described are subject to pending technical legislative amendments161/27/20149 Benefits Not AffectedNot affectedLife insuranceHealth insurance creditCommonwealth of Virginia Deferred Compensation plan (457)17 Disability Benefits18 State employees:Virginia Sickness and Disability ProgramSchool division and political subdivision employees:Virginia Local Disability Program or comparable employer planIncludes.

4 Short term DisabilityLong term DisabilityLong term Care1/27/201410 Disability Benefits One Year Waiting PeriodIf you re you will *State (VSDP)VSDP (continuous service with same employer earned prior to opting in counts toward the one year waiting period)State (disability Retirement ) VSDP (continuous service with same employer earned prior to opting in counts toward the one year waiting period)School/political subdivision VLDP (or your employer s comparable plan ) with a one year waiting period*Certain provisions as described are subject to pending technical legislative amendments19 Disability Benefits Waiting Period20 StateState (with no break in service)No new waiting periodStateSchool/political subdivisionOne year waiting periodSchool/political subdivisionSchool/political subdivisionOne year waiting period1/27/201411 Other Things to ConsiderPortabilityWork durationResponsibility21 ExamplesPlans to leave the CommonwealthWants to control his investments221/27/201412 ExamplesPlan 1 member who wishes to retire earlier23 Contributions241/27/201413 Current plan 1 and plan 2 Contributions25 EmployeeEmployerDefined Benefit Mandatory Contribution5%Total Employer RateHybrid Retirement plan Contributions26 EmployeeEmployerDB Mandatory Contribution4%Total Employer Rate, less employer DC contributionsDC Mandatory Contribution1%1%DC VoluntaryContributionUp to 4% additional contribution1% match on your first 1% + match on each additional Retirement plan Contributions27 TotalsICMA RCVRSEEDC Employee Mandatory 401(a)DC Employer Mandatory 401(a)

5 DC Employee Voluntary 457DC Employer Match for Voluntary 401(a)DB MatchYou must make the maximum 4% voluntary contribution to defined contribution component of the Hybrid Retirement plan to receive a match on contributions to your employer 457 or 403(b) plans281/27/201415 Auto EscalationIf you re not maxing out your voluntary defined contributions, the amount will increase every three years29 Calculator301/27/201416myVRS for Members31myVRS for Members321/27/201417 Overview Page33 Estimate Options341/27/201418 Estimate Options35 Estimate Options361/27/201419 Results Summary37 Assumptions381/27/201420 Modifying Assumptions39 Detailed Results Page401/27/201421 Detailed Results Page41 Deferral Scenario421/27/201422 Refund Scenario43 Refund Scenario441/27/201423 Decision Page45 Election Form461/27/201424 VRS-12047 VRS-120481/27/201425 Revoking the Decision49 Estimate ConsiderationsEstimates may not reflect your actual benefitsIf you change employers, any voluntary contributions selected will start at zero at the new employer501/27/201426 Resources51 VRSR esourcesYour employerVRS Hybrid Support TeamVRS: 1 855 291 2285 ICMA RC.

6 1 877 327 5261521/27/20142753 Who is ICMA-RC Non-profit, independent financial-services organization Exclusive focus on public sectorretirement plans Founded by public sector, for public sector in 1972 More than 5,000 municipalities in 49 states More than 180 plans and 45,000 participants in Virginia Headquartered in Washington, DC541/27/201428 Asset Classes Cash Equivalents and Stable Value Investments Short-term, highly liquid securities that pay interest Seek to preserve the value of your investment Returns are generally low and may not outpace inflation Bonds Loans to an organization in exchange for interest payments May offset higher risk of stocks in aggressive investment portfolio May help keep pace with inflation in conservative investment portfolio Stocks Shares of ownership in a company Highest potential for growth Higher degree of risk55 Your plan s Investment Options Organized into three pathways Designed to make it easier for you to implement your investment decisions Mix and match investment options within each path Help you meet your objectives.

7 Risk tolerance and overall investing styleDo-It-For-Me PathHelp-Me-Do-It PathDo-It-Myself Path561/27/201429Do-It-For-Me Path Includes target-date funds for participants who would like a portfolio that's already diversified. Select funds based on your projected Retirement date and individual PortfolioTarget Date 2015 PortfolioTarget Date 2020 PortfolioTarget Date 2025 PortfolioTarget Date 2030 PortfolioTarget Date 2035 PortfolioTarget Date 2040 PortfolioTarget Date 2045 PortfolioTarget Date 2050 PortfolioTarget Date 2055 Portfolio57 Help-Me-Do-It Path Offers a carefully selected menu of funds for those who prefer to take a slightly more active role in Market FundStable Value FundBond FundInflation-Protected Bond FundHigh-Yield Bond FundStock FundSmall/Mid-Cap Stock FundInternational Stock FundEmerging Markets Stock FundGlobal Real Estate FundVirginia Retirement SystemInvestment Portfolio581/27/201430Do-It-Myself PathSelf-Directed Brokerage Account Features a self-directed brokerage account for those who wish to manage investments without assistance.

8 Options include exchange-traded funds, individual securities and other Access FeaturesLogin with User ID and Password Features View balances Check asset allocation Transfer between funds View statements and Transfer63 Investment Resources641/27/201433 Defined Contribution plan SpecialistsPatrick Abelon, plan 888-803-2731 Sherrel Addison,Central 855-553-3095 Mackenzie Moss, Tidewater 855-253-1201 Steven McGregor, Western 855-253-1453 Steven Scott,Northern 855-553-3088 Janice Parker, Southwest 855-253-120265 Contact Us ICMA-RC Investor Services Team Call: 1-VRS-DC-PLAN1 (1-877-327-5261) Retirement plan Presentation for Members