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City of Alexandria, VA City of Alexandria, VA
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Page updated Jan 14, 2014 10:39 AM
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Virginia Retirement System Hybrid Retirement Plan  

Pros and Cons for Plan 1 and Plan 2 Members

The VRS Hybrid Retirement Plan (Hybrid Plan) was created by the Virginia General Assembly as a way for the state to save money.  As a result, Plan 1 and Plan 2 members may think their plans are better than the Hybrid Plan.  However, it might be advantageous for some employees to opt-in to the Hybrid Plan.  Following are some issues that Plan 1 and Plan 2 members may want to consider to determine if that is a good choice for them.

Pros

  • Is health or longevity an issue?  Plan 1 and Plan 2 will pay substantially all of their value in lifetime monthly benefits.
  • Are you an expert investor?  Be honest! 
  • Do you anticipate moving soon to another job that is not covered by VRS?
  • Is flexibility more important than retirement income security?

Cons

  • Is your health good?
  • Are you a poor investor?
  • Do you have roots in the area?
  • Do you anticipant salary increases, either from promotion or inflation?
  • Is retirement income security more important than flexibility?
     

This following chart summarizes the VRS plans that are are more advantageous for the above concerns.

 

 

Employee Concern or Goal 

Plan That is More Advantageous 

   Family History of longevity and healthy lifestyle

Plan 1-2

 

   Investment acumen & willingness to spend time on investment

 

Hybrid

   Health issues that shorten longevity

 

Hybrid

   Keep it simple

Plan 1-2

 

   Portability – change jobs prior to normal retirement age

 

Hybrid

   Preference of security of monthly income over a lump sum

Plan 1-2

 

   Preference for the flexibility of a lump sum over security

 

Hybrid

   Pay raises late in career significantly boosting final average salary

Plan 1-2

 

   Discipline to consistently make maximum deductions for maximum match

 

Hybrid

   Perseverance to stay employed until Normal Retirement Age

Plan 1-2

 

 

301 King St.
Alexandria, VA 22314
703.746.3900
Fax: 703.838.4987
E-mail

Office Hours:
Monday - Friday
8 a.m. - 5 p.m.