OUR WISCONSIN RETIREMENT SYSTEM - Strong for Wisconsin - Wisconsin Department of ...
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OUR WISCONSIN RETIREMENT SYSTEM Strong for Wisconsin
ETF executive team:
Pam Henning, Assistant Deputy Secre-
tary; Bob Conlin, Secretary; and John
Voelker, Deputy Secretary.
Wisconsinites should be proud to have a strong public pension system – one of the best
funded in the country. The continued due diligence and oversight of policymakers and
sound funding principles keep our Wisconsin Retirement System capable of paying
promised benefits long into the future.
Today more than 648,000 current and former state and local government employees and
their families rely on the WRS for some of their retirement security. These individuals,
along with their employers, contribute to the WRS throughout their careers.
Public employees provide crucial health, education, safety, transportation and
other services in our communities. And in return, the WRS provides a modest
retirement income; the median annual pension is $21,923. The WRS pays nearly
$5.6 billion in benefits annually – a large portion of this money gets spent in
Wisconsin by the more than 85% of retirees who live here.
In these pages we’ve provided some useful information about the WRS.
I encourage you to get better acquainted with why the WRS is strong
for Wisconsin.
Sincerely,
WISCONSIN STATUTE CHAPTER 40
The WRS trust funds were created to:
• Protect public employees and their
beneficiaries against the financial hardships
of old age and disability. Robert J. (Bob) Conlin
• Attract and retain a qualified public workforce. Secretary
• Establish modest and portable benefits to Wisconsin Department of Employee Trust Funds
move with employees throughout their careers
into retirement.
• Achieve administrative expense savings.
2 | OUR WISCONSIN RETIREMENT SYSTEM
$
112.1 BILLION
IN ASSETS 9th LARGEST
IN THE USA 25th LARGEST
IN THE WORLD
With approximately $112.1 billion in assets, the WRS is the 9th largest U.S. public pension fund and the 25th largest
public or private pension fund in the world. There are more than 648,000 individuals who participate in the WRS.
215K 173K
1,516 260K
annuitants former public employees
(retirees, disabilitants with deferred benefits
and beneficiaries)
state and local public employees in
government units Wisconsin’s state agencies,
throughout Wisconsin University of Wisconsin
OYEES BY E
EMPL MP
System, technical colleges
LO and school districts, cities,
YE counties, and local units
R of government
Counties
TY
Cities
33,007 Towns,
PE
22,448
N T CATEGORY
YME
Villages &
Special
LO
Districts
9,281 M P
YE
B
S
EE
LOY
State Agencies General
School & University 134,166
EMP
Districts 74,760
111,700
Technical Protective
Colleges Occupations Protective
9,055 without Occupations
Social Security with Social
2,768 Security Teachers
19,665 102,330
Executive/Elected
1,322
D E PA RT M E N T O F E M P LOY E E T R U ST F U N D S | 3
WRS: Well Designed = Well Funded
The WRS is a hybrid defined benefit plan. It contains elements of both a 401(k) or defined
contribution plan and a defined benefit plan. The WRS is a strong public pension plan
because of its stable funding, unique plan design and robust governance. These factors
set the WRS apart from the vast majority of other plans in the United States.
Although a number of plans are near or above 100% advance-funded, on average
the funded level in 2018 was 73%; 18% were less than 60% funded. The WRS is
100% funded.
Here are a few reasons why the WRS is successful:
PRE-FUNDED
• Contribution rates are determined annually by an independent actuary.
• Amounts paid by both employees and employers are paid in full, not
deferred into the future.
• Funds are invested for longer periods, which minimizes the chances that
one generation will have to pay for the obligations of another.
Pre-funding calculation:
B = C + I – E
Benefit
payments
Contributions Investment
earnings
WRS
administrative
expenses
“Wisconsin has done a very good job
of keeping contribution rates stable.”
— GRS & Company, WRS consulting actuary
4 | OUR WISCONSIN RETIREMENT SYSTEM
SHARED COSTS & SHARED RISKS
Investment risks and costs of the WRS are shared between government employees, employers (taxpayers)
and retirees. Unlike members of other public pension plans, WRS employees and retirees bear most of the risk.
• Contribution rates are generally split evenly between employees and employers and adjusted annually,
ensuring full funding of future benefits.
• Post-retirement adjustments (dividends) depend on investment performance and can be reduced based
on annual investment returns.
• No guaranteed cost of living adjustments or COLAs.
• Annuities cannot be reduced below the original amount set at retirement.
FINANCIALLY SOUND
The financial strength of the WRS ensures that benefit promises made today can be
kept without burdening future generations.
• Sustainable – Assets are sufficient to pay all benefits when due.
• Contribution Stability and Predictability – Employee and employer annual pension
contributions are paid in full and the contribution rates have remained stable over time.
• Intergenerational Equity – The cost of benefits are paid by those who receive the
benefits, not passed on to the next generation.
• Realistic Rate of Return on Investments – An assumed rate of return of 5.0% for retirees and
7.0% for active employees is used to determine plan liabilities. These rates are lower than the
national median of 7.25%.
•M odest Benefits – The median annual retirement benefit is $21,923.
Funds to pay pension benefits are generated from three sources:
1. Employee Contributions
2. Employer Contributions
3. Investment Earnings
Investment Earnings
Employers
Employees
80¢ 10¢ 10¢
D E PA RT M E N T O F E M P LOY E E T R U ST F U N D S | 5
WRS: Well Managed
Investment earnings WRS pension benefit and administrative expenses are paid from the
80%
comprise approximately WRS trust funds, not from general state operating revenues.
• Low Administrative Costs – The WRS spends $11 less than the peer
average of $98 per active member and annuitant.
• Low Cost for Taxpayers – Wisconsin state and local governments
spend 2.1% of their budgets on the WRS, compared to the national
of revenues needed to fund the WRS average of 5.2%*. No general taxes are required to support the WRS.
•L
ow Unfunded Liabilities – Wisconsin is 1 of 3 states with the
lowest levels of unfunded liabilities or long-term debt for public
“While it is a misconception to hold employee pensions.
that there is a one-size-fits-all
•S
trong Investment Earnings – The State of Wisconsin
solution to plan design and financing,
Investment Board professionally and prudently manages and
there are core principles that are
pervasive among public retirement invests the assets of the WRS. Approximately 80% of WRS
plans: mandatory participation, shared benefits paid come from investment earnings.
financing, benefit adequacy, pooled •E
fficient – The WRS provides lifetime benefits by
investment and longevity risks, and pooling mortality and other risks for more than
lifetime benefit payouts.” 648,000 participants.
—N
ational Association of State *percentages include City and County of Milwaukee
Retirement Administrators
6 | OUR WISCONSIN RETIREMENT SYSTEM
“You know you’re in the right job when you go
to work every day and say to yourself that you
get to serve the citizens of this county. I welcome
the challenge of providing safe roads for people
to travel. There is a great deal of satisfaction
in exceeding the public’s expectations when it
comes to the quality of service that we can deliver
to improve the quality of everyone’s lives.”
Jim, Fond du Lac County employee
and WRS Member
D E PA RT M E N T O F E M P LOY E E T R U ST F U N D S | 7
WRS: Economic Impact
A well-funded and well-managed retirement plan is not only good for employees,
it’s also good for Wisconsin. More than 85% of WRS pensions go to retirees living
in Wisconsin, who purchase goods and services and pay taxes.
M O N T H LY P E N S I O N
PA Y M E N TS B Y CO U N T Y
Bayfield
Douglas $1,567,575
$3,352,815 832
1736
Iron
$520,629
Ashland 290
$1,262,811 Vilas
670 $2,173,007
1074
Burnett Washburn
$1,835,467 Sawyer Florence
$770,244 $1,302,335 $265,014
443 972
698 Oneida 155
Price $4,130,581
$1,120,041 2014
601 Forest
Polk $647,478
$2,220,992 Rusk 371 Marinette
Barron $1,080,670 $2,731,505
1267 $3,286,188 645 1449
1728 Lincoln
$2,799,765 Langlade
Taylor 1428 $1,614,974
$903,992 859
Chippewa 473
St. Croix
$2,948,191 $4,950,505 Menominee
1585 Dunn 2680 $165,503
$3,864,600 Marathon 91 Oconto
1867 $7,741,164 Shawano $2,379,056 Door
Clark 3841 $2,235,072 1142 $3,198,388
Pierce Eau Claire
$2,819,101 $1,582,697 1212 1522
$9,610,983 882
1336 4482
Kewaunee
Portage Waupaca $1,290,787
Pepin Buffalo Wood $5,877,155 $4,325,998 Outagamie Brown 623
$420,481 $925,285 $6,184,151 2735 2249 $10,318,550 $16,764,818
234 482 Jackson 2955 4765 7347
$1,328,512
Trempealeau 771
$2,101,775 Waushara Manitowoc
1157 Adams $1,926,685 Winnebago Calumet $5,266,954
$720,612 1000 $12,810,581 $1,398,658 2647
Monroe 432 5839 725
La Crosse $2,182,670 Marquette
$8,789,719 1284 $1,404,350
4280 Juneau Fond du Lac
746 Green Lake $7,214,154 Sheboygan
$1,543,255 $1,523,049
872 3427 $8,082,521
749 3798
Vernon
$2,098,282
1193 Columbia
Sauk Dodge Ozaukee
$5,221,358 $6,469,066 Washington $7,003,019
Richland 3118 $6,677,751
$1,206,258 2598 3228 $7,911,456 2928
Crawford 700 3583
$900,560
523
Dane
$79,027,190 Jefferson Waukesha
Iowa 29686 $5,059,291 $27,306,149 Milwaukee
$33,050,831
KEY: Grant
$1,768,214
884
2481 11266
13346
County $4,053,774
2065 Racine
$ Total Monthly Payments Lafayette Green Rock Walworth $14,596,408
$3,038,712 $10,325,553 6257
# of Payees $1,177,811
1437 4879
$6,222,628
642 2944
Kenosha
Payments as of December 2019 $7,116,347
3217
8 | OUR WISCONSIN RETIREMENT SYSTEM
WRS Creates Jobs, Supports Wisconsin's Economy
1 in 5 Wisconsin residents are either
a WRS member or are affected by
the WRS as a family member.
53K
$
5.6 Billion
Expenditures from public The WRS paid $5.6 billion in
pensions supported 53,011 benefits in 2019.
jobs in Wisconsin that
paid $2.7 billion in wages
and salaries, and
generated $1.6 billion
in federal, state and
local tax revenues.*
$
2.7 Billion
$
1.6 Billion
*Pensionomics 2021: Measuring the Economic Impact of DB Pension Expenditures, report by the National Institute on Retirement Security
D E PA RT M E N T O F E M P LOY E E T R U ST F U N D S | 9
WRS: Strong Public Workforce
The WRS is an important incentive for qualified workers to choose and
stay in public service. Employees often accept lower wages now for future
retirement compensation.
The 1,516 state and local government employers participating in the WRS under-
stand the value of a well-funded and well-managed retirement plan. Additional
local government employers continue to join the WRS. Over the past
5 years, 54 local governments have chosen to join the system.
At a time when state and local governments are struggling to attract and
retain employees to deliver vital taxpayer services, a new national poll finds
that retirement and healthcare benefits are critically important job features,
more so than salary. These benefits are viewed as a powerful recruitment and
retention tool, with nearly all state and local workers (93%) saying that pensions
incentivize public workers to have long public service careers, and 94% agreeing
that a pension is a good tool for both attracting and retaining employees.
— National institute on Retirement Security, State and Local Government
Employee Views on Their Jobs, Compensation and Retirement
The WRS benefits package is a
EMPLOYEES BY valuable recruitment tool available
EM
PL to the State of Wisconsin, local
O governments, technical colleges
YE
and school districts throughout
RT
the state.
YP
29%
E
State
Government
AVERAGE ARS OF SERVICE
WRS RETIREE E YE
RAG
VE
A
71%
10.0
60 Local
Government
13.7
Executives & General
Retirement Age Elected
21
Years of Service 12.6
Teachers
$21,923 12.0
Median Annual Protective with
Benefit Social Security
13.9
Protective without
Social Security
10 | OUR WISCONSIN RETIREMENT SYSTEMRamzan, a retired WRS member, enjoyed
his career as a state facilities engineer.
Throughout his working years, he was able
to maximize his WRS pension by making
additional contributions to his account,
thereby contributing to a secure and stable
income for his retirement years.
D E PA RT M E N T O F E M P LOY E E T R U ST F U N D S | 11Check out ETF’s Government Relations page for:
•P roposed Wisconsin legislation and laws affecting
the WRS and ETF
• Federal issues and legislation
• WRS fact sheets, studies and reports
• National trends and research
• ETF action items
etf.wi.gov/about-etf/government-relations
Contact Us
Director of Strategic Engagement Communications Director
and Government Relations Mark Lamkins
Tarna Hunter 608-266-3641
608-267-0908 mark.lamkins@etf.wi.gov
tarna.hunter@etf.wi.gov
Stay Connected
etf.wi.gov
etf.wi.gov/about-etf/government-relations
Wisconsin Department of Employee Trust Funds
P.O. Box 7931
Madison, WI 53701-7931
Customer Service Toll Free
1-877-533-5020
ET-7100 (REV 12/31/2020) © 2020 ALL RIGHTS RESERVEDYou can also read
