active member

A participant of a pension plan who continues active employment in a covered position.

average final compensation (AFC)

A member's average final compensation, which is the average of the highest consecutive 36 months of creditable compensation, used by VRS to determine the retirement benefit amount.

beneficiary

The person designated to receive benefits under an employee benefit plan in the event of the death of the person covered by the plan.

deferred compensation

A voluntary supplemental retirement savings program which allows an employee to defer paying taxes on a portion of their compensation while saving for retirement. The deferred amount and any earnings that may result are not taxed until they are withdrawn.

defined benefit plan

In a defined benefit plan, such as VRS, each employee's future benefit is determined by a specific formula, and the plan provides a guaranteed level of benefits on retirement. Usually, the promised benefit is tied to the employee's earnings, length of service, or both.

defined contribution plan

A pension plan that provides for an individual account for each member, and for benefits based solely on amounts contributed to the participant's account and any investment income.

fiscal year (FY)

The 12-month period from July 1 to June 30.

pension

A series of periodic payments, usually for life, payable monthly or at other specified intervals. The term is frequently used to describe the part of a retirement allowance financed by employer contributions.

political subdivision

Local or regional governmental entities, including counties, cities, towns, school divisions, planning district commissions, local and regional authorities, community service boards, transportation districts and authorities, soil and water conservation districts, regional jails, and local and regional commissions.

retiree

A participant of a pension plan who has terminated active employment and who has begun to receive retirement benefits.

vested

Having established, by active employment for the required period, a right to pension benefits upon retirement. VRS active members are vested after five years of service.