The RRS Newslettera publication of the Richmond Retirement System

Winter / 2016 / Issue # 43

Your source for news and information from the RRS

As we enter the New Year, I would like to reassure all members of the Richmond Retirement System (RRS, System or the Plan) that their retirement assets are safe and sound.

The RRS Board of Trustees implemented a Governance Policy in 2016, which is a reflection of the Board’s strong commitment to good governance practices. The Board is at full strength with seven members. The Investment Advisory Committee (IAC) also has seven strong members. Our IAC members have an outstanding institutional investment background and are taking a hard look at the investments and investment managers in the portfolio.

Currently, the market value of assets is approximately $540 million. Last fiscal year was a difficult year for investors as the portfolio returned -0.1%, net-of-fees (net) at June 30, 2016. Conversely, investment performance is off to a good start this fiscal year with the portfolio up 3.9% net in the first three months of 2016-2017. As I write this column in the second week of December, the RRS portfolio continues to do well. Post-election, the equity markets have performed extremely well with all-time highs occurring on almost a daily basis into December. Regardless, markets will rise and fall over time, and the System expects to earn 7.5% on its investment portfolio over the long-term.

Regarding Cost of Living Adjustments, (COLAs), it is important to keep in mind that there are two types of COLAs. The first type is an automatic COLA whereby a government entity prefunds the COLA in their pension plan through the contribution rate; the City of Richmond

has never used this approach. VRS, the Virginia State Plan, prefunds their COLAs. The second type of COLA, referred to as an ad hoc COLA, is often based on the financial health of the pension plan. The City of Richmond utilizes the second type.

That leads us to the funded status, a financial measurement gauging the health of the Plan, which measures the assets vs. the pension liability. RRS’ funded status is 60.3% at June 30, 2016 and the unfunded liability is $340 million. The Board’s policy is to not recommend an ad hoc COLA unless the funded ratio is 80% or higher and the funded ratio must remain above 80% after the ad hoc COLA is granted. Accordingly, to protect the long-term financial health of the System, the RRS Board of Trustees did not recommend an ad hoc COLA to City Council this year. The System’s actuary projects, based on Board approved assumptions in place, that the funded status will cross the 80% threshold within ten years. Future investment returns play a big part in this forecast along with the City continuing to pay the Actuarially Determined Contribution (ADC). It is important to note that the City of Richmond has historically provided full funding for the ADC.

In closing, there is a plan in place to improve the funded status of the System to 80% within ten years, and 90% within fifteen years. However, this will take diligence, continued strong leadership and fiscal discipline, coupled with healthy investment markets in the future. As we move into 2017, please know that the Richmond Retirement System assets are in good hands. I hope you find the information in this newsletter beneficial and that you have a Happy New Year.

A Message from Leo F. Griffin, Executive Director

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Leo F. Griffin, CPA, Executive Director

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Planning for 2017: End of Year InformationTo help retirees plan and prepare to file their taxes, the RRS will mail payslips to all retiree homes on December 30, 2016. Additionally, a Form 1099-R will be mailed on January 31, 2017. Please wait until after February 15, 2017 to report (a) that a Form 1099-R was not received, or (b) to request duplicate copies.

To retrieve information from the RRS, such as a duplicate Form 1099-R, please submit a signed written request. The Benefit Information Request Form can be used for this purpose. Due to the high volume of requests the RRS receives, all forms take up to 5 business days to process. This includes forms submitted during walk-in hours. For a blank form, please visit www.richmondgov.com/retirement or call the RRS at (804) 646-5958.

To change federal or state tax withholding information, please submit a signed Form W-4P or Form VA-4P to the RRS at 730 E. Broad Street, Suite 900, Richmond, Virginia 23219. Forms can also be faxed to (804) 646-5299.

The City of Richmond Department of Human Resources (HR) administers health and dental insurance benefits, and each year during open enrollment eligible retirees can choose to add, drop, or modify coverage. Changes - such as the decision to add or drop an eligible dependent - can impact a retiree’s net pay. This year open enrollment was from October 31, 2016 to November 21, 2016, and retirees will first notice any changes on the January 31, 2017 pay date.

To confirm any changes, retirees are able to view payslips which itemize deductions by logging on to RAPIDS Retiree Self Service. For questions about the health and dental insurance benefits, please contact HR. The telephone number for HR is (804) 646-5660.

Box 1: Gross DistributionWhat the RRS paid you in 2016.

Box 2a: Taxable Amount�e total taxable amount for 2016.Box 1 - Box 5 = Box 2a

Box 4: Federal IncomeTax Withheld�e total amount of federal taxeswithheld in 2016.

Box 5: EmployeeContributions�e total amount of “nontaxable pension” payments the RRS paid you in 2016.

Box 7: Distribution Code(s)�is shows the distribution type, and more information about Box 7 will be located on the back of your form.

Box 12: VirginiaIncome Tax Withheld�e total amount of Virginia taxes withheld in 2016.

1099-R Miniguide for additional information, contact the IRS

REMINDER: Update Your Address

The most common reason a Form 1099-R is not received by a retiree is that their address is not up-to-date. USPS® mail forwarding instructions can expire. Therefore, all retirees who move are encouraged to submit an Address Change Form.

To request or submit forms, please visit the RRS website or call. Forms can also be submitted by mail or fax.

While retirees are paid by direct deposit, it is important for retirees to keep their mailing address up-to-date. The RRS frequently makes contact to:

• Mail important tax-related information at year-end,

• Mail checks to retiree homes when a Direct Deposit Authorization Form is received, and /or

• Send letters to retirees concerning their benefits.

Planning for the Future

From time-to-time, the RRS recommends that retirees update their Beneficiary Appointment / Change Form.

For retirees hired before June 13, 1988, this form can be used to designate a beneficiary to receive a one-time death benefit of up to $1,000.

Retirees eligible for HR-administered life insurance benefits should also submit a VRS Designation of Beneficiary Form. All forms are available online or by dialing (804) 646-5958.

Fast Fact #1

The more allowances and exemptions that you list on a Form W-4P or Form VA-4P, the less money the RRS will withhold.

Fast Fact #2

If you submit a Direct Deposit Authorization Form, it will be processed on the 15th of the month.

The month that your form is processed, you will receive a paper check, and the RRS recommends that you keep your old account open until this occurs.

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Richmond Retirement System730 E. Broad Street, Suite 900Richmond, Virginia 23219

visit us online at www.richmondgov.com/retirement

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2017 Pay Dates

Payment for: Deposited on:

January 01/31/2017

February 02/28/2017

March 03/31/2017

April 04/28/2017

May 05/31/2017

June 06/30/2017

Payment for: Deposited on:

July 07/31/2017

August 08/31/2017

September 09/29/2017

October 10/31/2017

November 11/30/2017

December 12/29/2017

Payslips are available online using RAPIDS Retiree Self Service. To access RAPIDS, go to the RRS website, www.richmondgov.com/retirement. For retirees who do not have access to the internet, you can request to have a payslip or a formal pension verification mailed to you using a Benefit Information Request Form. Due to the high volume of requests the RRS receives, all forms may take up to 5 business days to process. To have a blank form mailed to you, please dial (804) 646-5958.

Retirees are always paid the last business day of the month. Therefore, if you have direct deposit, you will receive your payment for December 2016 on Friday, December 30, 2016. Pay dates for 2017 are: