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Employers

Employer Bulletin

All Employers
Vol. 17, No. 16
August 28, 2000

1999 Wisconsin Act 185 on Spelling of Employee; Update on Variable Trust Fund Participation and 1999 Wisconsin Act 11

Wisconsin Act 185 Changes Spelling of Employe to Employee

Effective September 1, 2000, Wisconsin Act 185 - Section 193 allows the Department of Employe Trust Funds (ETF) to use either the one "e" or two "ee" spelling of employee for official purposes. ETF has now established the two "ee" spelling of employee as the Department's standard and implementation plans to update all Department documents are underway.

An announcement about this spelling change will appear in the September 2000 edition of Trust Fund News to notify employees, former employees and annuitants of this change.

Questions about the spelling change can be directed to the Employer Communication Center at (608) 264-7900.

Update on Variable Participation and 1999 Wisconsin Act11

If the Wisconsin Supreme Court rules that 1999 Wisconsin Act 11 is constitutional, the Variable Trust Fund will be opened to new elections by active participants. Wisconsin Retirement System (WRS) participants who are currently employed by a WRS participating employer may elect to have 50% of their future contributions deposited in the Variable Trust Fund. Employers are responsible for providing the proper forms to those participants who wish to elect to participate in the Variable Trust Fund.

Please note:

  • You should post the attached notice providing details on Variable Trust Fund participation in locations that are readily accessible to your WRS-covered employees.
  • We have enclosed a supply of the Election to Participate in the Variable Trust Fund (ET-2356) form. The form includes complete instructions.
  • You should provide an election form to employees interested in choosing to participate in the Variable Trust Fund. The Department will notify employees of this provision in September's edition of Trust Fund News.

Participation in the Variable Trust Fund is not valid until the election form is received by ETF. Instruct employees to submit the form directly to ETF, not to you. Election forms for currently active employees who wish to elect variable participation beginning in 2001 are due to ETF by December 29, 2000, even though the decision by the Supreme Court may not be completed at that time. Variable elections received by ETF after December 29, 2000 will not go into effect until the following January 1 (e.g., if the election form is received by ETF on January 3, 2001, their variable participation begins January 1, 2002). Variable elections will be processed by ETF depending on the outcome of the court decision currently under review by the Wisconsin Supreme Court.

Employees may obtain additional information on the Variable Trust Fund and a download a copy of the election form by visiting ETF's internet site: etf.wi.gov, or by contacting ETF's Call Center toll-free at 1-877-533-5020 or (608) 266-3285 (local Madison).

You may contact the Employer Communication Center at (608) 264-7900 for information on the employers' role in this process. For an additional supply of the Election to Participate in the Variable Trust Fund (ET-2356) form:

  • Make photocopies of the enclosed forms.
  • Request copies from ETF's Supply and Mail Services at (608) 266-3302.
  • Call ETF's 24-hour self-service line, toll-free at 1-877-383-1888.
  • Visit ETF's Internet site: etf.wi.gov.
  • Complete the attached order form and mail it to ETF, PO Box 7931, Madison WI 53707-7931.
  • Fax a copy of the completed order form to ETF at (608) 267-4549.
  • E-mail ETF by clicking "contact us" on ETF's internet site, etf.wi.gov, and provide the same information requested on the order form.

O R D E R F O R M

Election to Participate in the Variable Trust Fund (ET-2356)

DEPARTMENT OF EMPLOYEE TRUST FUNDS
PO BOX 7931
MADISON WI 53707-7931

Election to Participate in the Variable Trust Fund (ET-2356)

Employer Name ______________________

Your Name _________________________

Address ___________________________

City __________________ State ________

Quantity

Wanted ___________

EIN 69-036- _______

Title ______________

Phone # ___________

Zip Code __________

Update on Variable Participation and 1999 Wisconsin Act 11

If the Wisconsin Supreme Court rules that 1999 Wisconsin Act 11 is constitutional, the Variable Trust Fund will be opened to new elections by active participants. Wisconsin Retirement System (WRS) participants who are currently employed by a WRS participating employer may elect to have 50% of their future contributions deposited in the Variable Trust Fund.

If you are interested in participating in the Variable Trust Fund, contact your employer for an election form, Election to Participate in the Variable Trust Fund (ET-2356). You may also download a copy from the Department of Employee Trust Funds' (ETF) Internet site: http://badger.state.wi.us/agencies/etf, or call ETF at one of the numbers listed below to have a copy mailed. Instructions for completing the election are included on the election form.

The election to participate in the Variable Trust Fund applies only to future contributions. You may not transfer existing account balances into the Variable Trust Fund. It is important to understand that while participation in the Variable Trust Fund offers the possibility of gain, you must also be prepared for investment losses. A variable annuity carries the risk of a smaller amount of monthly retirement income as well as a greater amount. (See accompanying article.)

Consider an election to participate in the Variable Trust Fund carefully. Once ETF receives the election form to participate in the Variable Trust Fund, the election form can only be withdrawn by filing an Election to Cancel Variable Participation (ET-2313)with ETF.

Participation in the Variable Trust Fund is not valid until your election form is received by ETF. Mail the form directly to ETF; do not submit the form to your employer. Variable election forms will be processed by ETF depending on the outcome of the court decision.

Conditions for enrollment in the Variable Trust Fund will vary, based on circumstances specific to your status:

Current active employee never having participated in the Variable Trust Fund:

  • Is eligible to enroll in the Variable Trust Fund upon ETF's receipt of the Election to Participate in the Variable Trust Fund (ET-2356).

    If the provision of Act 11 reopening the Variable Trust Fund is ruled legal by the Supreme Court, the first possible effective date of the new Variable Trust Fund enrollment will be January 1, 2001. For an election to be effective January 1, 2001, ETF must receive your variable election form by December 29, 2000, even though the decision by the Supreme Court may not be completed at that time. Employees who are actively working in a WRS covered position are eligible to elect variable if they are actively employed on or after January 1, 2001.

    Variable election forms for current active employees received after December 29, 2000 will become effective on the January 1 of the year after the year they are received by the Department. Example: Employee is covered under WRS September 4, 1993. Election notice is received on January 3, 2001. Coverage effective date is January 1, 2002.

New WRS Participants on or after January 1, 2001:

  • For new WRS participants who return their variable election form to ETF within thirty calendar days of the start of their WRS covered employment, variable participation is immediate. Example: Employee is covered under WRS on January 15, 2001. Election notice is received on February 8, 2001. Coverage effective date is January 15, 2001 and all contributions after that date will be split between the Variable and Fixed Trust Funds.
  • For new WRS participants who return their variable election form to ETF thirty-one calendar days or later after the start of their WRS covered employment, variable elections are effective on the January 1 of the year after the year they are received by ETF. Example: Employee covered under WRS on January 15, 2001. Election received on March 15, 2001. Coverage effective date is January 1, 2002.

Employees who previously opted out of the Variable Trust Fund:

  • Active participants who cancelled their Variable Trust Fund participation with an effective date of January 1, 1999 or earlier have an opportunity to re-elect to participate in the Variable Trust Fund.
  • Active participants who cancelled their Variable Trust Fund participation with an effective date of January 1, 2000 or later, cannot re-enroll in the Variable Trust Fund. If you cancelled participation on or after January 1, 2000, the only way you may re-enroll in the Variable Trust Fund is by closing your WRS account (ending your WRS participation and withdrawing your account balance), then later returning to work for a WRS participating employer. By becoming a new participating employee, you would have a new variable election option.

For additional information on how the Variable Fund can affect your annuity, contact ETF's Call Center toll-free at 1-877-533-5020 or (608) 266-3285 (local Madison area). You may also contact the Call Center to request the following publications, or request them from our 24-hour self-service line, toll-free at 1-877-383-1888.

  • Election to Participate in the Variable Trust Fund (ET-2356)
  • Election to Cancel Variable Participation (ET-2313)
  • Calculating Your Retirement Benefits (ET-4107)
  • How Participation in the Variable Trust Affects Your WRS Benefits (ET-4930)

ABOUT THE VARIABLE TRUST FUND

The Variable Trust Fund is invested exclusively in common stocks. These are currently the same stocks that are in the Fixed Trust Fund. The high investment earnings of the Variable Trust Fund over the past decade have generated considerable interest in reopening the Variable Trust to new enrollments.

The WRS annually credits investment gains (or losses) to certain active and inactive member accounts and dividends to all annuities. Annuitants participating in the Variable Trust Fund likewise receive adjustments based on Variable Trust Fund returns. Their adjustments are credited to the variable portion of their annuities.

The rate of interest for participating active and inactive member Variable Trust Fund accounts has been near or above 20% for the seven of the past ten years. Annuitants have enjoyed similar good fortune, with double digits most of the past decade. However, those participating in the Variable Trust Fund must be prepared for the possibility that poor stock market performances could result in investment losses. Variable Trust Fund annuitants experienced a 4% decrease in their Variable Trust annuities in 1994 and a 14% decrease in 1990.

Participating in the Variable Trust Fund will affect your retirement annuity. In contrast to fixed annuities, which are never less than the initial fixed monthly amount, a variable annuity may decrease to less than the initial monthly amount. This is because unfavorable stock market performances may result in investment losses to Variable Trust Fund accounts as much as positive stock market performances may result in investment gains. Variable annuity payments increase or decrease based on variable investment results as of December 31 each year.

  • If your benefit is higher under the money purchase calculation method, the fixed and variable portions of your account will each be multiplied by the money purchase factor for your age to produce the fixed and variable portions of your straight life annuity. The relative amounts of your fixed and variable annuities will be in direct proportion to the amounts in your fixed and variable accounts.
  • If your benefit is higher under the formula calculation method, a "variable adjustment" calculation will be made to your annuity by multiplying the variable excess or deficiency in your account by the money purchase factor for your age at the time your benefit begins. The variable excess or deficiency amount is based on a comparison of the actual balance in your account versus what your account balance would be if you had been invested only in the Fixed Trust. The actual dollar amount of the variable excess or deficiency will change each year, based on the investment experience of the Fixed and Variable Trust Funds, and will be shown on your annual Statement of Benefits. The relative amounts of your fixed and variable annuities are NOT normally in direct proportion to the amounts in your fixed and variable accounts.

 

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