The Virginia Retirement System has appointed a new chief investment officer to protect and build the trust fund that provides most of the retirement benefit money to state employees, teachers and other public servants.
The VRS board of directors voted on Wednesday to appoint Andrew H. Junkin — current chief investment officer for the state of Rhode Island — to succeed current CIO Ron Schmitz, who will retire in January. Junkin will start working at VRS in September, with Schmitz staying until the end of the year.
Virginia has a much larger retirement system than Rhode Island, with more than $106 billion at the end of March to serve more than 751,000 active employees, retirees and former public servants. By comparison, the Rhode Island Employee Retirement System operates a $10.5 billion pension fund and a $2 billion defined contribution plan for approximately 32,000 public employees.
VRS Chairman A. Scott Andrews said Junkin “has demonstrated vision and skill as an investor in both the public and private sectors.”
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“He has led high performing teams, worked collaboratively in diverse environments and developed innovative investment strategies,” Andrews said. “His collective experience serves as an essential foundation for pursuing excellence and performance in the VRS investment program.”
Prior to serving as CIO in Rhode Island, Junkin worked at Wilshire Consulting, an investment banking firm in California, for 15 years, including five as chairman. Prior to that, he worked as a senior consultant and president at Asset Services Co. in Oklahoma.
VRS relies on a combination of its own in-house investment staff and external fund managers to oversee investments that partially offset the need for state and local government contributions to pay for employee retirement benefits.
The General Assembly is expected to vote next week on a new budget that could include a one-time investment of up to $1 billion in the VRS Trust Fund to reduce by $19 billion the unfunded long-term pension liabilities that the system has carried for its five state plans — including teacher retirement — since major investment losses during the Great Recession.
These losses were compounded by the state’s chronic underfunding of its pension obligations for state employees and teachers until the assembly passed a series of pension reforms in 2012 that included a commitment to fully fund VRS-certified contribution rates to meet long-term pension liabilities.
The Senate version of the budget includes a $1 billion payment to VRS that would reduce contribution rates paid by state and local governments for the retirement of their employees, about $76 million more than the US government. ‘era. Ralph Northam proposed last year in his farewell budget. The House included $500 million for VRS in its spending plan.
Budget negotiators are working to reach an agreement this week between the House of Delegates and the Senate on revisions to this year’s state budget and a new one for the next two years, beginning July 1. The assembly is due to return to Richmond next Wednesday to take up budgets and other unresolved bills from the regular session which ended March 12.
VRS posted a record 27.5% return on investment in the past fiscal year, which ended June 30, taking the trust fund above $100 billion for the first time.
Results may not be as good this year as the stock market tumbled in the economic fallout from rising inflation, high energy prices and the long-running Russian invasion of Ukraine. three months, prompting Governor Glenn Youngkin and other political leaders in Virginia to ask the system to withdraw investments in Russia.
“I look forward to joining VRS’ dynamic and nationally recognized investment team, known for its innovation and successful investment strategies,” Junkin said Wednesday.
“My goal is to build on the accomplishments of this team, remaining focused on VRS’ efforts to generate investment returns within the fund’s risk parameters and to provide retirement security for Virginia’s dedicated public servants. “