The Bulletin

Virginia Retirement System estimates it had about $100M in Russia-linked investments

By: - March 10, 2022 12:03 am

VILNIUS, LITHUANIA – FEBRUARY 24: People hold flags and posters during a protest against Russian attack on Ukraine near the Russian Embassy, on February 24, 2022 in Vilnius, Lithuania. Overnight, Russia began a large-scale attack on Ukraine, with explosions reported in multiple cities and far outside the restive eastern regions held by Russian-backed rebels. (Photo by Paulius Peleckis/Getty Images)

The Virginia Retirement System Trust Fund recently had around $100 million in investments linked to Russia, according to VRS officials who oversee the pension fund for the state’s public employees.

But the agency says it can’t determine the current value of those assets due to the turbulence in Russia’s financial system following the country’s invasion of Ukraine.

As of Feb. 24, VRS’s “exposure to Russian investments” was about 0.1 percent of the trust fund, according to a spokesperson for VRS, the agency that oversees retirement benefits for more than 750,000 former and current public employees. The fund’s total value is estimated at $107.2 billion, according to the most recent quarterly report.

VRS spokeswoman Jeanne Chenault said the system has only “minimal investment exposure” in Russia-linked assets. She said the agency could not immediately provide a detailed accounting of its specific investments in Russia or their value.

We would expect the current value to be lower as compared to the February estimate but cannot determine an updated value because the markets are now closed to transactions and trading,” Chenault said in response to questions from the Mercury.

In response to Russia’s invasion of Ukraine, Gov. Glenn Youngkin specifically mentioned the state’s retirement fund last month as he called on state-affiliated entities to “divest in a prudent and orderly fashion any and all holdings of the Russian ruble and any and all securities of Russian companies.”

But divestment efforts have been complicated by the extended closure of the Moscow Exchange and widespread disruption to the Russian economy.

The Virginia Retirement System offices in Downtown Richmond. (NBC12)

“The regulatory, investment and market conditions in Russia are changing rapidly, and VRS is working with its investment partners to develop short- and long-term plans in response to the crisis,” Chenault said. “Currently, broad-based trading restrictions exist within and outside of Russia, making trades difficult or even impossible.”

Dumping Russian stocks after they plummeted in value could mean losses for investment funds. For example, the Kentucky Teachers’ Retirement Fund lost $3 million from selling its shares in a Russian bank, according to NBC News. The pension fund’s initial investment had been $15.6 million.

Chenault said VRS is “deeply concerned by the Russian invasion of Ukraine and for the Ukrainian people who are suffering.” But exactly how the agency plans to handle its financial ties to Russia remains unclear.

“Consistent with prudent investment standards and our fiduciary duty, VRS, our managers and legal counsel will continue to closely monitor this rapidly shifting situation,” Chenault said. “In addition, VRS will comply with the federally mandated sanctions and restrictions regarding Russian investments.”

VRS describes itself as the 17th largest public or private pension fund in the U.S. and the 46th largest in the world, with  more than 750,000 active and inactive members, retirees and beneficiaries. Those include public school teachers, employees of cities, towns, special authorities and commissions, state agency employees, public college and university personnel, state police, Virginia law officers and the judiciary.

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Graham Moomaw
Graham Moomaw

A veteran Virginia politics reporter, Graham grew up in Hillsville and Lynchburg, graduating from James Madison University and earning a master's degree in journalism from the University of Maryland. Before joining the Mercury in 2019, he spent six years at the Richmond Times-Dispatch, most of that time covering the governor's office, the General Assembly and state politics. He also covered city hall and politics at The Daily Progress in Charlottesville.