WRS News Online

A Look at WRS Financials

The Wisconsin Retirement System paid out more than $4.5 billion in benefits in 2014. Sound funding and plan design principles keep the WRS financially strong. It’s the fiduciary responsibility of the Department of Employee Trust Funds to report to you, the legislature and Wisconsinites about how the WRS is doing.

Complete WRS financial statements, with notes and supplementary information, can be found in ETF’s 2014 Comprehensive Annual Financial Report.

WRS Assets and Reserves
As of the end of 2014, the WRS had net assets of more than $92 billion, an increase of $2.2 billion over 2013. These assets are invested in a balanced portfolio of stock, bonds and other investments managed by the State of Wisconsin Investment Board.

Wisconsin Retirement System
Statement of Net Assets
(millions $)

  2014 2013
Assets  
Stocks $50,725 $48,961
Bonds 27,139 26,372
Other Investments 10,717 10,843
Other Assets 3,566 3,749
Total Assets $92,147 $89,925
 
Reserves  
Annuity Reserve $51,133 $48,461
Employer Reserve 22,030 21,279
Employee Reserve 16,403 15,559
Market Recognition Account 2,463 4,570
Other Reserves 118 56
Total Reserves $92,147 $89,925

$51.1 billion of reserves are set aside to pay monthly benefits to our current 186,000 retirees; the average annual benefit is $24,185. The annuity reserve, increased by 5% annual interest, will be sufficient to pay lifetime benefits without any additional contributions.

The employer and employee reserves include contributions made by and on behalf of non-retired participants. While the employee reserve is made up of over 400,000 individual participant accounts, the employer reserve is a single comingled account with no separation of individual employer contributions. At the time a participant retires, the present value of their annuity is transferred to the annuity reserve from the employer and employee reserves. These reserves are also used to pay separation and death benefits.

The Market Recognition Account is used to smooth the effects of investment gains and losses on the WRS. The excess or deficiency of investment returns are spread over five years. As a result, the WRS has $2.4 billion in past investment gains that will be used to supplement current income or offset investment losses over the next four years.

WRS Revenues and Expenses
Investment income is the largest source of revenue for the WRS. While 2014’s 5.7% investment return was lower than the long-term average, it was still more than double the employee and employer contributions combined.

Employer contributions are paid by WRS employers and are held in the employer reserve until needed for a transfer to the annuity reserve to fund new annuities. Employee contributions are primarily paid by WRS participants and are held in individual accounts for the participant until retirement or paid as a separation benefit if the employee leaves covered employment and chooses to withdraw contributions.

When you compare total WRS expenses of $4.6 billion to combined employee and employer contributions of $1.9 billion, the importance of a strong investment program to make up the difference is clear.

Wisconsin Retirement System
Statement of Changes in Net Assets
(millions $)

 

2014 2013
Revenues  
Investment Income $4,889 $11,343
Employer Contributions 1,023 915
Employee Contributions 906 871
Other Income 3 4
Total Revenues $6,821 $13,133
 
Expenses  
Annuities $4,540 $4,225
Separation Benefits 34 33
Administration 24 22
Total Expenses 4,598 4,280
 
Addition to Net Assets $2,223 $8,853