Richmond Retirement System reports 84.9% funded status; council seeks COLA cost estimates

Leo Griffin, executive director of the Richmond Retirement System, told the Richmond City Council on March 23 that the system’s funded status rose to 84.9% as of June 30, 2025, up from 80.9% the previous year.

"Our 1 year number is 10.5% that exceeded the assumed rate of return of 7," Griffin said, adding that the fund’s five‑year annualized return was 8.2% and that the portfolio had outperformed a custom benchmark since a 2020 restructuring.

Griffin said strong investment returns and a one‑time cash infusion from pension obligation bonds were the main drivers of the recent improvement. "The net proceeds that went to RRS in June 2024 were $120,000,000," he said, noting the bond proceeds materially increased the 2024 funded status.

The board’s actuarial picture: Griffin reported the net pension liability at $157,000,000 (down from $193,000,000 at June 30, 2024) and reiterated that the defined‑benefit plan is closed to new general employees, who now enter the Virginia Retirement System (VRS).

Keya Johnson, senior deputy director of RRS, reviewed membership counts: about 4,051 retirees, roughly 1,055 active defined‑benefit members, approximately 1,800 in the 401(k) plan, and about 1,700 vested terminated members. She also showed a 10‑year projection that, under current actuarial assumptions, moves funded status toward full funding by roughly 2034.

Council members focused questions on cost‑of‑living adjustments (COLAs). Several members said retirees have repeatedly asked for relief and asked under what funding level RRS would recommend a COLA. Griffin said the RRS board’s actuary previously advised against granting ad‑hoc COLAs unless they were prefunded.

Actuarial consultants on the meeting’s Teams call cautioned about the tradeoffs. "If you don't pre fund it, all you're going to do is push that liability into the future, which increases the contribution rates," Dan Holm of Sageview said. Actuarial presenters gave illustrative prefunding estimates: a 1% COLA prefunded would require on the order of $6,000,000 (actuaries noted precise calculations are needed), while a 3% prefund would be roughly $20,000,000.

Griffin and the actuarial team emphasized that prefunding preserves funded status and avoids raising the actuarially determined contribution (ADC) later. They also noted that amortization of a legacy liability is scheduled to end circa 2033, which helps reduce future employer contribution pressure.

Council members asked for further detail. RRS staff and actuaries committed to provide precise figures showing how a 1% COLA would change the ADC and to provide a breakdown of the employer‑contribution trajectory under different COLA and investment scenarios.

The presentation closed with RRS agreeing to return the requested numeric analyses to council for deliberation on whether to propose a prefunded or ad‑hoc COLA.