WRS News Online

Message from Leadership

Bob Conlin

Robert Conlin

WRS Continues to be Strong for Wisconsin
by Robert Conlin, ETF Secretary

As we kick off 2018, let me just say right out of the gate that your Wisconsin Retirement System continues to be in very good health. While the average funded status of public pension plans nationally hovers just north of 70%, the WRS funding ratio (a measure of whether a pension plan has sufficient assets to pay promised benefits) was 99.1% at the end of 2016, as measured under the Government Accounting Standards Board requirements. The State of Wisconsin Investment Board's strong performance in 2017 will increase this funding ratio and provide for a Core annuity adjustment of around 2% this spring, and exert downward pressure on contribution rates for 2019. The WRS is well positioned for the future.

Are there risks ahead? Yes. Stock prices — by many measures are — expensive. At some point, stock prices will likely correct. The period of economic recovery we've seen since the financial crisis of 2008 has been a long one and eventually the economy is bound to dip. Regardless of when these things happen, short-term economic projections — though not as dire as just a few years ago — indicate that it will still be a challenge to make money in the investment markets without taking excessive risk.

This year WRS consulting actuaries will be reviewing the various demographic and economic assumptions used to properly fund the WRS. The review is part of their regularly-occurring, three-year experience study of the WRS. One of the most significant assumptions they will review is the investment return assumption, which is currently 7.2%. They will be ask whether it is reasonable to continue to assume the WRS will be able to earn 7.2% per year over the medium and long term. In 2010 our actuaries recommended reducing the then — current assumption of 7.8% to today's rate. While 7.2% is somewhat conservative when compared to other public pension plans, we have seen many plans across the country revise their investment assumptions downward over the last couple of years — and many expect that trend to continue.

The actuaries will review multiple national economic investment forecasts, consult with SWIB's investment advisors, and calculate various investment outcomes based on SWIB's mix of assets — all to determine the reasonableness of continuing with today's 7.2% assumption. It's a rigorous process designed to keep the WRS well-funded in all kinds of investment climates.

Although lowering investment return assumptions in other states has led to larger unfunded liabilities and increased costs, the unique design structure of the WRS, coupled with our healthy funding level, will dampen any negative effects if the actuaries recommend a reduction. The WRS will continue to be strong for Wisconsin.

Other Items of Note for 2018:

SWIB: 2018 will usher in a change of leadership, as Michael Williamson is taking a well-earned retirement (see SWIB Names New Executive Director). Rick Smirl has extensive experience leading high-performing professional investment entities and he's well positioned to lead SWIB into the future.

New Location: The Department of Employee Trust Funds is set to move to a new location at the end of March. We will have brand new, up-to-date office space in the new Hill Farms State Office Building. It's been more than a decade since ETF staff have been in one building, and the move should improve our operational efficiency. We're also looking forward to introducing new individual and group counseling facilities to better serve folks planning for retirement.

 

 Rick Smirl
Rick Smirl

SWIB Names New Executive Director

Rick Smirl has been appointed Executive Director of the State of Wisconsin Investment Board. Smirl comes to SWIB after serving as partner and chief operating officer at William Blair Investment Management. The firm provides investment solutions to individuals, pension funds, insurance companies, corporations, state and municipal government entities, sovereign wealth funds, and other leading institutional investors across the globe.

Smirl, who has more than 25 years of asset management industry experience with a demonstrated track record of success, begins his duties January 22.

"I was attracted to SWIB because of its compelling mission and focus on being a trusted and skilled global investment organization contributing to strong financial futures for the beneficiaries of the funds. That, coupled with my long-standing family ties to Wisconsin made this an exciting opportunity. I am looking forward to working on behalf of the public employees of the State of Wisconsin and building on SWIB's strong foundation as a pension fund leader," Smirl said.

As chief operating officer at Chicago-based William Blair Investment Management, Smirl oversaw all infrastructure activities across the firm's institutional asset management, mutual funds, and private wealth management businesses totaling more than $73.9 billion in assets under management. He also served as a member of the board of trustees of the firm's U.S. mutual funds and is a director of the European funds. The firm has more than 1,300 employees. Before joining William Blair in 2004, he served as the chief legal counsel of the former Milwaukee-based Strong Capital Management, an asset management firm that managed more than $50 billion in assets. He also was a partner at the law firm of Los Angeles-based Keesal, Young & Logan, where he counseled financial services firms.

The SWIB Board of Trustees conducted a nationwide search, which generated a large field of skilled and experienced applicants.

"We were impressed with the number and quality of applicants who were interested in leading SWIB," said David Stein, SWIB Board chairman. "We are excited to have chosen Rick, who possesses the management and leadership experience to lead an innovative, agile, and integrated investment organization like SWIB into the future."

Smirl replaces Michael Williamson, who became Executive Director in 2012 and recently retired.

Smirl holds a bachelor's degree in economics from the University of California at Irvine, and a Juris Doctorate from Loyola Law School in Los Angeles. He has also completed an executive education program at the University of Virginia's Darden Graduate School of Business Administration.