Pension funds are funded by contributions from employees and employers. In the case of both the Teachers and State Employees, the employer is the State (but this is changing). School district support staff are members of VMERS. With VMERS the employer is the school district and the municipality. All pension funds are managed by the state. Currently there is not enough funds in either of the three retirement systems to fully fund the State's projected obligations.
Retirement funds are constantly taking money in as contributions and paying money out as benefits. New members are constantly added to the system. Members retire and switch from contributors beneficiaries. Retirees die and no longer receive benefits. This makes it tricky to determine accurately how much money is needed at any given time to fund current and future obligations. A truly stable fund would have enough money to fully fund future commitments. That's taking into account all the new money coming in, any going out, and the return on investments. The Funded Ratio would then be 100%. If employee and state contributions continue as scheduled and return on investment averages out to 7.5% in the long term the funds will have a 100% Funded Ratio in 2038.
2018 Funded Ratios
- VSTRS: 54%
- VSERS: 71%
- VMERS: 84%
The problem is that a 7.5% return is not guaranteed and if it is not achieved, the state has to make up the difference. The Treasurers website has lots of detailed information about the investments made by the funds.