HYBRID RETIREMENT PLAN - Virginia Retirement System · the Hybrid Retirement Plan member website,...

HYBRID RETIREMENT PLANHelping You Plan for Tomorrow, Today

Hybrid Retirement Plan: www.varetire.org/hybrid-erVRS Hybrid Retirement Plan Support Line: 1-855-291-2285 | [email protected]

Defined Contribution Questions: 1-VRS-DC-Plan1 (1-877-327-5261) | [email protected]

Voluntary Contributions Campaign Guide for EmployersVRS has teamed with ICMA-RC, the plan record keeper, to pack the toolkit with resources that will help reinforce the importance of saving for retirement.

Inside Your Toolkit:• Resources for Administering Voluntary Contributions: To assist you with the administration of

voluntary contributions, this one-page reference sheet includes links you need to process contributions.

• Hybrid Resource Sheet: Need a quick overview to provide your members? This sheet includes links to the Hybrid Retirement Plan member website, publications and retirement counseling information.

• Voluntary Contributions Campaign Flyers: These PDF flyers provide a great opportunity to talk with hybrid members about the importance of voluntary contributions. Print these flyers and place around the office (lunchrooms, elevators, community boards) to spotlight how contributing even a little now will help greatly in the long term. You can choose which to use and how you’d like to use them. Consider attaching these PDFs to emails you send to your members.o The Ripple Effecto I’ll Take $3 From the Savings Menuo Voluntary Contributions: How Important Are They To Your Future? (Two options)o Clear the Obstacles to Saving for Retiremento Don’t Miss Out on the Matcho Pay Less Income Tax Now

• Sample Messaging: Use this prepared messaging to reach members across your organization via email, intranet and social posts regarding saving for retirement.

• Slide Deck: Orient new hybrid members or provide an overview of the purpose of voluntary contributions. Pick and choose among the slides as you develop your own presentations.




Resources for Administering Voluntary Contributions

The following resources will help you develop a greater understanding of voluntary contributions, set up your payroll to accommodate contributions and track employees’ changes to their contributions. Visit the Hybrid Retirement Plan employer resource center at www.varetire.org/hybrid-er for more information.

Covering the Basics

• “UnderstandingHybridRetirementPlanContributions”video:Learn about contributions for both the defined benefit and defined contribution components of the hybrid plan, as well as voluntary contribution auto escalation and how your Total Employer Rate is calculated.

• HybridRetirementPlanWebsiteforEmployers(voluntarycontributionsinformation):Learn about employee voluntary contributions to the hybrid plan, your required match and how often employees can change their contribution election.

Setting Up Your Payroll

• PayrollGuide:This guide provides step-by-step directions and in-depth explanations of enrollment, calculating the employer match and defined benefit rate, and submitting contributions. It also contains information about a variety of special circumstances and aspects of administering the hybrid plan. Choose the version that’s appropriate for your organization:o Payroll Guide (for CIPPS-reporting state agencies)o Payroll Guide (for political subdivisions, school divisions and non-CIPPS-reporting state agencies)

Tracking Changes to Employee Contributions

• DeferralChangesReport: Read Track Voluntary Contributions Using Deferral Changes Report to learn how to use this report to see when an employee changes his or her contribution election.

• AccessingtheDeferralChangesReport:Learn how to access this report in EZLink, ICMA-RC’s web-based system: www.icmarc.org/x3333.xml?RFID=WC604.




Hybrid Resource Sheet

The following resources are available on the Hybrid Retirement Plan member website: www.varetire.org/hybrid

Hybrid Retirement Plan General InformationResource Description Where to Look

Hybrid Retirement Plan Features and Benefits Series

Provides hybrid plan members with an overview of their plan. The six-part video series includes an introduction to the plan and a description of how contributions and investments are handled, along with an explanation of the benefits available to hybrid plan members and retirement eligibility.

Education

Hybrid Retirement Plan Handbook

Provides benefit information about the hybrid plan.

Publications

Hybrid Plan Features and Highlights

Provides a brief overview of the Hybrid Retirement Plan, including member resources and FAQs.

Publications

Defined Contribution group seminar or one-on-one counseling

Provides a link to sign up for an individual appointment with a Defined Contribution Plan Specialist, for upcoming retirement planning seminars, classes and more.

Contact Us

The following newsletters are available for members and can be found on the Publications page:

• Member News, the VRS quarterly newsletter for members. Sign up today: www.varetire.org/newsletter

• Focus, the VRS quarterly newsletter for participants in the Hybrid Retirement Plan and Defined Contribution Plans

Reasons to start or increase voluntary contributions to your

Hybrid 457 Deferred Compensation Plan:

Your employer will match a portion of your contributions. If you put money in your Hybrid 457 Deferred Compensation Plan account (up to 4% of your paycheck*), your employer

will match a portion of that contribution (up to 2.5% of your paycheck amount*).

Your retirement contributions don’t just sit in your account — they’re invested. The amount you set aside from each paycheck, plus the amount

your employer puts in, is invested in funds that you choose.

Your investments could generate compounded earnings, and then compounded earnings on those compounded earnings. This could make your money go

further than if you simply set it aside without investing or spent it now.

Try it today! Log into your Hybrid 457 Deferred Compensation Plan account, start or increase your voluntary contributions — and watch your savings grow.**

For more details, visit www.varetire.org/hybrid.

The actions we take now have the potential to create effects that ripple into the future. Like tossing a stone into water and watching its motion generate waves far away — saving a little more for retirement now could make a big difference when you retire.

* This refers to your creditable compensation, which is your annual salary not including overtime pay, payment of a temporary nature or payments for extra duties such as pay for teachers who provide coaching or act as an advisor for special activities.

** You can change your voluntary contribution amount once per quarter. AC: 21109-201409

A RETIREMENT RIPPLE EFFECTWATCH YOUR SAVINGS GROW

It’s simple to start or increase your voluntary contributions today — and just imagine if

you doubled your order!For more details, visit www.varetire.org/hybrid.

If you saved that $3 per day in your retirement

plan, it could really add up over time! For example,

almost $15,000 after 10 years and more than $90,000 after 30 years.*

I’LL TAKE $3 FROM THE SAVINGS MENULOOKING FOR EXTRA CASH TO INCREASE YOUR CONTRIBUTIONS FOR RETIREMENT?

* For illustrative purposes only. Assumes biweekly contributions of $42 and an effective annual return of 6%, compounded biweekly.

$14,940

10 years

$42,143

20 years 30 years

$91,675

AC: 22164-201409

10%-15%The amount of current

pay you should be saving for retirement

80%The percentage

of U.S. households (with at least one earner)

with retirement savings that amount to less than

their annual income.

59%The percentage

of Generation Xers who are not saving

enough for retirement

42%The percentage of Millennials/

Generation Yers who have yet

to plan a strategyfor retirement

80%The percentage of Boomers who wish

they had started saving earlier and saved more

for retirement

38 millionThe number

of U.S. households who do not have

retirement accounts

The Value of Contributing More Money Over TimeMembers may voluntarily contribute up to an additional 4 percent in 0.5 percent increments to the Hybrid 457 Deferred Compensation Plan each month and receive an employer match.

MandatoryContributions Only

$0

$100,000

$50,000

$150,000

$25,000

$39,028

$78,036

$107,327

$136,598

$168,869

$125,000

$75,000

$175,000

4% VoluntaryContributions




This chart demonstrates the added value of contributing more money over time.

CumulativeInvestment Earnings

1% Employee Mandatory1% Employer Mandatory





1% Employee Voluntary1% Employer Matching

2% Employee Voluntary3% Employee Voluntary

1.5% Employer Matching 2% Employer Matching





4% Employee Voluntary

2.5% Employer Matching

Learn more at www.varetire.org/hybrid

For illustrative purposes only and based on a monthly income of $2,000; assumes bimonthly employee contribution made on 15th and 30th of each month and a 6 percent average annual return after 30 years. The final account balance does not account for plan fees or expenses, which would reflect lower net returns. Investment return and principal value will fluctuate, so when shares are redeemed they may be worth more or less than the original cost.

VOLUNTARY CONTRIBUTIONSHow Important Are They to Your Future?

First, here’s how your Hybrid Retirement Plan works, in a nutshell:

Defined Benefit

(your pension)

+Defined

Contribution(you make contributions,

you choose how they’re invested)

= Your Hybrid Retirement Plan

You can make voluntary contributions to the defined contribution component of your hybrid account —

up to 4 percent of your creditable salary.

Why? To receive an employer match — up to 2.5 percent of your creditable salary.

http://www.varetirement.org

Pay yourself firstaren’t you worth the investment in your future?

learn more at www.varetire.org/hybrid

Source: PLANSPONSOR.com

VOLUNTARY CONTRIBUTIONSHow Important Are They to Your Future?

10%-15%The amount of current pay

you should be saving for retirement

44%The percentage of American employees

who save 10% or less of their annual income each year

80%The percentage of U.S. households

(with at least one earner) with retirement savings that amount

to less than their annual income

38 millionThe number of U.S. households

that do not have retirement accounts

36%The percentage of American employees

who have never increased the percentage of salary they defer

into retirement accounts

26%The percentage of plan participants

who have not increased their defined contribution retirement account

contributions in at least a year

25%The percentage of people

who did not increase contributions because they were already contributing

to their plan at or near the legal limit

33%The percentage of men

who contribute the maximum amount allowed to their retirement accounts

17%The percentage of women

who contribute the maximum amount allowed to their retirement accounts

80%The percentage of Boomers who wish

they had started saving earlier and saved more for retirement

59%The percentage of Generation Xers

who are not saving enough for retirement

42%The percentage

of Millennials/Generation Yers who have yet to plan a strategy

for retirement

http://www.varetirement.org

AC: 22174-201409

CLEAR THE OBSTACLES TO SAVING FOR RETIREMENT

When it comes to saving for retirement, it’s easy to procrastinate.Try these ideas to help you take action today!

Find Resources at Your Fingertips

• Register for an upcoming live webinar.

• View a video about your retirement plan.

• Register for a group seminar or a one-on-one consultation.

• Contact a Defined Contribution Plans Retirement Specialist.

Retirement Is Closer Than You Think• Write down your goals for retirement and revisit them

every year.

• Seek professional assistance: Start working with a financial advisor.

• By investing early, your money has more time to work for you.

• However, it’s never too late start saving for retirement, at any age. Better late than never.

• Your future depends on you.


Discover Simple Ways to Save

• Give up your fast-food lunch one day a week.

• Brew your own coffee.

• Drink tap water instead of buying bottled water.

• Borrow books, movies and music from your local library.

There’s No Time Like the Present• Did you know about the voluntary contribution

component of the Hybrid Retirement Plan? It may help you reach your retirement goals by allowing you to save even more. Set up your voluntary contributions at varetire.org/hybrid.

• Checking this off your to-do list feels great!

• Your contributions are tax-deferred, meaning you pay less in taxes now and save for the future.

• You’re passing up your employer’s match by not making voluntary contributions that qualify for it.

I can’t afford to save.

I’ll get to it someday.

I don’t know how to invest ... or get help.

I’m young…retirement is ages away.or

I’ve waited too long to start saving.

http://www.varetirement.org/hybrid/upcoming-live-webinars.html

https://harper1.icmarc.org/participant/planning/eventRegistration.jsp?SiteId=190757

http://www.varetirement.org/hybrid/education/dc-plans-specialists.html

AC: 22173-201409

DON’T MISS OUT ON THE MATCH YOUR EMPLOYER WILL MATCH A PORTION OF YOUR VOLUNTARY CONTRIBUTIONS

If you miss out on your employer’s match, you’re leaving money on the table!

Hybrid Retirement Plan members have multiple opportunities to save for retirement.

Did you know that you can make additional voluntary contributions, on top of your mandatory 1 percent contribution, to your Hybrid 457 Deferred Compensation Plan? Here’s how it works:

Your employer will match a portion of your contributions. If you put money in your Hybrid 457 Deferred Compensation Plan account (up to 4% of your creditable compensation*), your employer will match a portion of that contribution (up to 2.5% of your voluntary election).

* Creditable compensation: Your annual salary not including overtime pay, payments of a temporary nature or payments for extra duties such as pay for teachers who provide coaching or act as an advisor for special activities.

**You can change your voluntary contribution election once per quarter.

It’s quick and easy! Sign up or log into your Hybrid 457 Deferred Compensation Plan account, start or increase your voluntary contributions — and discover how your contributions and your employer’s match can help your savings grow.**


up to 4% of your creditable

compensation*

up to 2.5% of your voluntary

election

you employer

AC: 22175-201409

PAY LESS INCOME TAX NOWTHE RETIREMENT VERSION OF ‘BILL ME LATER’

Save for retirement now — pay taxes when you withdraw!

Did you know that if you make voluntary contributions to your Hybrid 457 Deferred Compensation Plan you can pay less in income tax now?

Here’s how it works: Contributions you make from your paycheck to your retirement plan don’t count in your taxable income now — you pay taxes when you withdraw your retirement money, typically later in life.

Quick and easy: Sign up or log into your Hybrid 457 Deferred Compensation Plan account, start or increase your voluntary contributions — and enjoy tax advantages now!*

*You can change your voluntary contribution election once per quarter.

LATER

START

INCREASE VOLUNTARY

CONTRIBUTION ELECTION

(ONCE PER QUARTER)

SAVE FOR RETIREMENT

PAY TAXES WHEN YOU WITHDRAW

PAY LESS IN INCOME TAX





Sample Articles and Messaging

SHORT ARTICLES: Suggested for employer newsletters, intranet sites and message boards

ARTICLE 1: Why should I consider making voluntary contributions?Here’s a scary statistic – four out of five U.S. households have retirement savings amounting to less than their annual household incomes. In other words, not enough. If you’re a Hybrid Retirement Plan member, you can change that statistic by starting or increasing voluntary contributions to your Hybrid Retirement Plan today. How do voluntary contributions increase your retirement savings?• You receive a match from your employer. If you invest in the defined contribution component of your

Hybrid Retirement Plan (up to 4 percent per paycheck), your employer matches a portion of that contribution (up to 2.5 percent).

• You reduce your taxes. Your funds are tax-deferred until you withdraw them.• You invest your contributions and your employer’s contributions to potentially earn more money.• Your investments earn compound interest, contributing to your retirement fund.• You can start small and increase the amount in increments over time.• You can change your voluntary contribution amount once per quarter. • Retirement may be closer than you think, but saving for it is easier than you imagine when funds are

automatically deducted from your paycheck.

To get started, visit www.varetire.org/hybrid and enter your User ID under Defined Contribution Log-in.

ARTICLE 2: Save a Little, Earn a LotWhat would you sacrifice today for a better retirement tomorrow? That second cup of coffee? The car-chase app on your smartphone? The super-large popcorn at the movies? Small sacrifices now can add up quickly when it comes to retirement savings.

If you’re a member of the Hybrid Retirement Plan and are thinking about starting or increasing voluntary contributions to your defined contribution component, check out the power of investing over time:• Pass up that $4 coffee every day, save and invest at 5 percent and over 30 years, you could end up with

an extra $187,000 in retirement.• Packing your lunch one day instead of going out, saving $7 each week, invested at 5 percent could add

up to more than $212,000 in 30 years.

It’s not even that big of a sacrifice, is it? To start making all that money, visit www.varetire.org/hybrid and enter your User ID under Defined Contribution Log-in.

The future is coming.It’s closer than you think.

Will you be ready?

How the Hybrid Plan Works

2

Voluntary Contributions

Reduce your taxable income by increasing your

voluntary contributions.

Learn more about saving with VRS educational

resources for members.

Increase your contributions

until you reach the maximum level.

Pay yourself first. You’re worth

the investment in your future!

3

• You can voluntarily contribute up to an additional 4 percent in 0.5 percent increments into the Hybrid 457 Deferred Compensation Plan

• Your employer must match the first 1 percent of your voluntary contribution into the Hybrid 457 Deferred Compensation with a corresponding contribution of 1 percent of your creditable compensation

• Each of your additional 0.5 percent increases will be matched by your employer with a 0.25 percent contribution

• The match will be credited into the Hybrid 401(a) Cash Match Plan

• You can increase or decrease your voluntary contributions on a quarterly basis

Generations & Retirement

MillennialsBorn 1981-1999

• Manage day-to-day money issues

• Deal with serious debt

• Give low priority to saving and investing

• Need to begin saving for retirement

• Need to build emergency savings

• Respond to causes• Like interactive

communication• Want transparency

Generation XBorn 1965-1980

• Have multiple financial obligations

• Need advice for managing cash flow

• Need to save more money for future retirement needs

• Respond to sources they trust

• Want education to be unbiased, free from conflicts of interest or hidden agendas

BoomersBorn 1946-1964

• Have strong money management skills

• May not have saved enough

• Deal with college bills

• Lack emergency savings

• See long-term care costs increasing

• Need to work with a financial advisor

• Need to run financial projection for retirement income

4

Does This Sound Familiar?

“I’m already saving the minimum. Will increasing my voluntary contributions really make a difference in the long run?”

“I’ve got to help my parents and pay my children’s college bills. Then I’ll worry about retirement.”

“I’d like to learn more about saving for retirement, but I can’t afford to pay a financial advisor.”

“I need income to pay bills now, not to save for some point in the future.”

“How can I buy the things I want, if I have to put more money into my retirement savings?”

“I’ll start saving for retirement when I get a better job… when I make more money… when I pay off my debt… when I…”

“Retirement’s a long way off… there’s plenty of time to save.”

5

Consider These Statistics

More than half of Generation Xers (59%) are not saving enough for retirement; 40% live beyond their means.

More than two in five (42%) Millennialshave yet to plan for retirement.

Tax deferral is important for retirement savings, say 75% of Boomers.

When participants perform retirement income calculations, 20% increase contributions by five percentage points.

Four in five (80%) U.S. households with at least one earner have retirement savings that amount to less than their annual income.

Experts suggest saving 10%-15% of current pay to have sufficient retirement savings.

More than 38 million U.S. working-age households do not have retirement accounts.

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See the Difference

7

Increase Your Contributions







8

• You can increase or decrease your voluntary contributions on a quarterly basis

• To make a change to your voluntary contribution, use the Account Log-in page on www.varetire.org/hybrid or call Investor Services at 1-877-327-5261 and select option 1

• The cut-off for the change is the 15th of the month prior to the next quarter

• If the 15th is not a business day, the deadline will be the next business day after the 15th

• Example: You must request the change by September 15 for the change to be effective in the first payroll of October

You Have the Power!

Increase your voluntary contributions today.

Small increases can make a big difference!





Increase your contributions

until you reach the maximum level.



Remember thatit’s never too early

to start saving for retirement!

9

The future is coming.You can be ready.

Increase your voluntary contributions today.

10

For more information, contact your human resource office

or visit www.varetire.org/hybrid

11

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