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WRS News Online Vol 2, No. 1 - January 2016

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Teachers: Vote in the Teachers Retirement Board Election

Voting period: February 1-29, 2016

Wisconsin Retirement System teachers have the opportunity to elect three members to the Teachers Retirement Board in February. The 13-member TR Board advises the Employee Trust Funds Board on retirement and other benefit matters involving public school, vocational, state and university teachers.

Active teacher members of the WRS (excluding those employed by the City of Milwaukee, Wisconsin technical college system districts or the University of Wisconsin System) are eligible to vote in this election.

Four candidates are vying for three seats on the TR Board. Review the candidates’ statements below, then vote online or via telephone -- the choice is yours! Both methods are secure and user friendly.

Follow these two easy steps to cast your vote:
1. Find your ETF member ID number -- you will need it to cast your vote. If you don’t know your ETF member ID number, obtain it on the ETF registration site.

2. From February 1 through February 29, 2016 cast your ballot online -- it only takes a few minutes! You may also vote via telephone -- call toll free 1-888-879-9641.

Note: The ETF registration website and the voting website will not open until February 1, 2016.

Questions? Contact the election help desk via email or call toll free 1-888-492-4763. Assistance will be available 24/7 from February 1 through February 29, 2016.

Meet the Candidates
TR Board: Active Teacher Member Seat
You may vote for up to three of the four candidates.

ETF asked the candidates to respond to these questions. Below are their responses (in alphabetical order).

  1. How long have you been a member of the Wisconsin Retirement System?
  2. Why do you want to serve on the Teachers Retirement Board?
  3. How would your service on the Teachers Retirement Board help the board and the WRS?
  4. What qualifications/experience do you have that would make you a good board member?

Chris Heller
Chris Heller

Chris Heller
I am currently in my 30th year as a member of the WRS. I wish to become more knowledgeable regarding legislative action and gain a better understanding of all the offerings our pension provides and how ETF functions. I have 30 years of experience working with people as a coach, committee chair, and president of a professional organization. I understand the importance of keeping the big picture in mind when making individual decisions. I believe my calm, analytical demeanor would be an asset to the Teachers Retirement Board and Wisconsin Public Employees. Over the past 5 years I have served as the treasurer for the Appleton Education Association and the former WEAC-Fox Valley UniServ. I participated in the National Institute for Financial & Economic Literacy. I have been recognized by WEA Member Benefits as a financial mentor.

Brent Mansky
Brent Mansky

Brent Mansky

I have been a member of the Wisconsin Retirement System for 11½ years. Issues related to the WRS are incredibly important to those who contribute and I feel that my experiences would add a positive voice to the board. I feel that I am a good listener and have the ability to see both sides to issues. I'm willing to do my homework to learn and understand more about what the WRS will have to continue doing in order to remain the benchmark for state retirement systems. I have an undergraduate emphasis in Economics and teach an Investing course and take an active role in educating the teachers within our district about retirement issues. 

Allison Pratt
Allison Pratt

Allison Pratt

I have been a WRS member, teaching Wisconsin Kindergarten children for 32 years. For the last 26 years, I have taught children in the School District of Onalaska. I wish to serve on the Wisconsin Retirement System Board as a teacher member and work with fellow teachers and trustees throughout Wisconsin to keep the retirement system strong and viable for future generations of hard working members. A strong retirement system will help to attract and retain quality employees to Wisconsin classrooms and state and local government. Wise WRS creators and board members have created a system to help protect public employees and their families against financial hardships. Their forward thinking designed and maintained a system with operating principles, priorities and goals that have kept the WRS among the top 5 in the country with the security and ability to honor long-term commitments to both retired and working members. I want to assist in keeping this tradition.

My reputation of integrity, commitment to success, and respect for open communication will enable me to be a strong advocate to protect the trust funds to help assure funding for the future retirement benefits of all current active employees. Preparation for this job has included 31 years as a local, regional and state union leader representing and advocating for employees working conditions, children's learning conditions, and public education. I have been entrusted to act on behalf of members in monetary and policy decisions. Through this work, I have developed fiduciary skills in business, communication, problem solving and organizing.

As a 12 year union local president, I have collaborated with all interest groups to discuss, plan, and design employee and district policy and financial benefits. At the regional level, my presidency and 11 year board of director’s position has included the management of staff, office, member finances and serving on the state board of directors. For 10 years, my second job at a local business has enabled me to be instrumental in business management and financial records.

My experiences have developed my ability to set priorities, establish goals and craft strategies to reach those goals and keep the WRS among the elite retirement systems in our country. I believe I possess the leadership, thinking, and problem solving skills to collaborate with other board members and represent WRS teacher members and keep the WRS mission alive.

Robin Starck
Robin Starck

Robin Starck

I have been a WRS member for 31 years as a Teacher in the Sheboygan Area School District. I have been honored to serve on the TR Board for the last 10 years. As a longtime WRS member, I have experienced the attempted misuse of our retirement investments by elected officials of our State Government. Fortunately, responsible and sensible Board Members and ETF personnel have been watching out for all of us. I want to maintain that vigilance as I continue to be a TR Board member.

As a Board Member, I have served as Secretary, Vice Chairman and currently serve as Chairman of the TR Board. During these years, I have facilitated the introduction and passage of several policies to help the TR Board run smoothly and hold us to our fiduciary responsibilities. I have also worked with new members to help acquaint them to the Board. As Chairman, I have helped to set agendas and run our meetings. In addition, I have been trained to hear and judge appeals by our members. I also serve as a voice for our membership and a guide to point members to the wide range of resources available to all of us.

I have 10 years of current Board and Board Leadership experience. I have been trained in the basics of retirement systems, actuarial studies, investment strategies, and the intricacies of our top rated fully funded system. As a math major I understand the formulas and data driven decisions that are made to keep our system strong. I want to build on that experience in the next 5 years.

Ready to vote?
Follow these two easy steps:

  1. Find your ETF member ID number -- you will need it to cast your vote. If you don’t know your ETF member ID number, obtain it on the ETF registration site.
  2. From February 1 through February 29, 2016 cast your ballot online -- it only takes a few minutes! You may also vote via telephone -- call toll free 1-888-879-9641.

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Message From Leadership

Robert  Conlin
Robert Conlin

WRS: Meeting Founding Expectations
by Robert Conlin, Department of Employee Trust Funds Secretary

When we hear about pensions in the press, the focus is often only on retirees. While this is certainly a defining feature of pensions, significantly less attention is paid to another critical aspect of pension plans, namely their significance in attracting a qualified workforce.

The founders of the Wisconsin Retirement System envisioned a statewide structure that would facilitate the attraction and retention of employees to public service, offer equitable benefit standards throughout public employment and ease the transfer of personnel between public employers. As 2016 begins, I think it’s fair to say that the WRS is meeting those expectations.

At the end of 2015, nearly 1,500 state and local governmental units throughout Wisconsin were participating in the WRS and had enrolled more than 250,000 current public employees in the WRS. These include very large employers, like the University of Wisconsin System and campuses and state agencies, and very small employers, like municipal housing authorities and sewerage districts. More than a dozen additional units of government are poised to extend WRS coverage to their employees in 2016. As noted in this issue’s Legislative Update, legislation is pending that would make it easier for public employers to join the WRS.

Wisconsin’s public employers understand the value of a well-funded public pension plan offering reasonable benefits in order to attract and retain a qualified workforce. Not surprisingly, most Americans tend to agree. According to a survey sponsored by the National Institute on Retirement Security (NIRS), 87% of Americans say pensions are a good tool to recruit public employees.

Moreover, when our public employees retire and begin drawing a pension, much of that money will be spent in those same communities where the benefits were earned. In 2015, the WRS paid approximately $4.5 billion in benefits to retirees and beneficiaries, more than 80% of whom live in Wisconsin. The majority of the benefits paid come from investment earnings generated by the State of Wisconsin Investment Board and not from taxes.

Not only does the WRS provide vital economic support to retired public workers, it helps ensure a vibrant public workforce is available to support communities across this great state.

 

Michael Williamson
Michael Williamson

Managing Risk to Protect the WRS
by Michael Williamson, State of Wisconsin Investment Board Executive Director

When you think of risk what comes to mind? Maybe you think about the risk you take when you get behind the wheel of your car to drive in the first snow storm of the year. We don’t know when that first storm will hit each year, but we know we have to prepare ourselves the best we can for when it does. We might put snow tires on our car and throw a blanket, shovel and salt in the car’s trunk. Our winter driving strategy might involve choosing an alternate and safer route to get where we need to go. Ultimately, we are trying to reduce the risk that we will end up hitting a rough spot, sliding off the road and not making it to our final destination.

Risk is something we all try to avoid, even though we know that it is a factor in just about everything we do in life. Some of us have a little bit higher threshold than others when it comes to the amount of risk we are willing to take. It is no different in the investment world. Dealing with investment risk is something that can keep even the most veteran investors up at night. How much is too much and is the reward worth the risk? When it comes to the Wisconsin Retirement System, risk takes on a very significant role in the investment strategy we implement. The WRS’s unique shared risk/reward design means investment returns directly impact annuity adjustments for retirees and contribution rates for active employees and employers. The struggle is finding the right balance between taking enough risk to make sure the WRS is providing the benefits promised to its participants and taking too much risk that could cause volatile swings in annuity adjustments and contribution rates.

Entering a Low Return Environment
Our 2015 returns, as well as the performance of the stock markets, indicate that we are in an environment where it will be possible to make money, but there will be significant investment challenges moving forward. Many economists believe this “low return environment” will result in investment returns over the next decade similar to those we have seen the past couple of years, rather than the higher ones we saw in the 1980s and late 1990s.

To overcome the challenges of a low return environment and meet their target returns, many public pension funds will increase the amount of risk they are willing to take with the money of their participants. Those funds will be forced to take increased risk because of underfunding and guaranteed annuity increases, regardless of investment returns. But what about the WRS?

Lessons Learned Influence Strategy
While 2008 was painful, it taught us that a risky investment strategy could hurt participants with a repeat of significant negative annuity adjustments and increased contribution rates. That is why we have implemented a strategy that, just like the alternative and safer route you might choose to get to your final destination when driving in the first snow storm, takes less risk but will get the WRS to its ultimate destination: a 7.2% return over the long-term.

Our strategy involves reducing the Core Fund’s exposure to stocks and, because diversification is key to managing risk, increasing our allocation to lower-risk assets such as bonds, real estate, hedge funds and private equity, which can perform well when stock returns are down. We have done this because 85% of our investment risk comes from the stock market. Currently, about 49% of the Core Fund, compared to 59% prior to the 2008 market decline, is invested in global stocks. While the performance of both U.S. and international stock markets still influence investment returns, dramatic swings in returns should be reduced. Overall, WRS investments are mixed across a variety of markets and numerous, widely varied investments within each market. With this strategy, WRS returns will rarely match market returns. Sometimes they will trail when stocks are performing well and at others they will finish ahead of falling stocks. This should reduce volatility in annuity adjustments and contribution rates as well as keep the WRS among the only fully-funded public pension plans in the country.

Confident Moving Forward
We are fortunate that the WRS is fully-funded and, despite the challenging road ahead, we are confident that our investment strategies can achieve our 7.2% assumed rate of return over the long-term. This means we will not have to reach for higher returns and take more risk with your retirement money. But -- just like preparing to drive in the snow -- there are no guarantees that getting to the final destination will be easy. We will need to be careful, monitor conditions and be ready for some rough spots. But in the end, I am confident we can hold our ground, get through this challenging period and, over the long-term, be successful.

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Couple travelling

Retirement Financial Security -- Will You Be Able to Live the Retirement of Your Dreams?

Although they are solid sources of retirement income, your WRS pension and Social Security benefits might fall short of your needs and wants, or living the retirement of your dreams. That’s why you need a “third leg of the retirement income stool” (i.e., personal savings).

The Wisconsin Deferred Compensation Program is a supplemental retirement savings program that may help. The WDC is available to state and university employees. Local government and school district employees may also be eligible if their employers offer this optional benefit.

Growing your retirement savings is easy with the WDC because it’s easy (paycheck deduction), inexpensive (comparatively low fees) and lowers your taxable income with tax-deferred investments. Pre-tax (Roth) options are also available.

“Now in retirement, my estimated retirement income from the WDC is two thirds of my state pension,” said WDC participant Rick Donovan, who worked for the Wisconsin Department of Corrections for more than 27 years and recently retired. “I believe that the younger you start the better, but it is never too late to start contributing. I personally like the Roth option, because I like paying my taxes upfront.” Read about Rick’s experience in MoneyTalks, a newsletter for WDC participants.

How can you build your own three-legged retirement income stool?

  1. Enroll in the WDC (if available) or investigate another supplemental retirement savings program. Use the WDC’s new online tool to schedule an appointment with a local WDC representative.
  2. Increase the amount you defer to your WDC account. It may not be easy, but putting aside even a few extra dollars each month can make a significant difference in your future income. Need convincing? Play with this compound interest calculator and read up on the power of compound earnings.
  3. Create your mySocial Security account and find out more about your potential benefit amount, options.
  4. Set a realistic budget and stick to it. Here’s a fun video to teach you how in six easy steps.
  5. Take advantage of helpful online ETF resources available to you through the EMPOWER campaign – you’ll find articles, research papers, brochures, helpful checklists, quick worksheets, videos and much more.

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Know Your Benefits

Robert  Conlin

Q: Are you getting close to retirement and wondering how to get started?

A: Check out ETF’s popular interactive webinar, 5 Basic Steps to Your Retirement. An ETF benefits specialist reviews the steps to take for your retirement – beginning with the importance of keeping your contact information and beneficiary designations current, requesting a benefit estimate at least 12 months before your target retirement date, identifying ways to enhance your benefit, and more. Find this and all of our webinars, videos, and public presentations on the Member Education webpage.

If you are within five years of retirement: Consider attending one of our benefit presentations – locations held statewide from January to March.

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SWIB Continues to be a Low-Cost Pension Manager

There is a saying, a dollar saved is a dollar earned. For the State of Wisconsin Investment Board, that proved to be the case millions of times over in 2014. By reducing costs through asset allocation, managing more funds internally and passively, and negotiating lower fees for external managers, SWIB’s costs were $207 million less than its peers–substantially below the peer median, according to an independent report from CEM Benchmarking, Inc., an independent provider of objective benchmarking for public pension plans.

“Every dollar we are able to save through our management choices benefits the trust funds just like every dollar we earn through investment returns,” SWIB Executive Director Michael Williamson said. “Controlling costs, along with making money and managing risk, is at the center of our mission to ensure the Wisconsin Retirement System remains among the best funded public pension systems in the country and is able to fulfill the promised retirement benefits to its members.”

Fewer Higher-Cost Assets
SWIB has implemented an investment strategy designed to take less risk and generate favorable returns while helping to protect the Core Fund from the volatility that comes from the stock market. A key to this strategy, which also helps stabilize annuity adjustments and contribution rates, is the diversification of investments.

In addition to investments in stocks, the Core Fund also includes holdings in other asset classes such as real estate, hedge funds and private equity. These assets, while important to the diversification of the Core Fund, can be expensive to manage. SWIB’s decision to investment in fewer higher-cost assets saved $144 million in 2014, according to CEM.

Internal Management, Lower Fees Save Money
As important as the types of assets SWIB chooses to invest in is how those investments are managed. By using more of its own staff and negotiating lower external management fees, SWIB generated an additional $63 million in savings in 2014.

A majority of that savings, $56.5 million, came from SWIB managing more assets internally, approximately 62% of the retirement trust funds, and passively, approximately 40% of assets, than its peers. The value added above market returns to the trust funds, after costs, has been significant, generating $1.5 billion over the past five years. Managing a significant portion of the assets internally helps keep SWIB’s total costs lower than its peers, according to CEM.

“Over the past several years, we have been building a stronger internal management program that is providing a significant financial benefit to the retirement system,” Williamson said. “We have a very talented and skilled staff that is able to manage the assets of the WRS for a fraction of the cost of using external managers. And for investments that our staff is not able to manage internally, we work hard to negotiate the lowest fees possible with the external managers we hire.”

SWIB reports on cost of management to the Board of Trustees and the Legislature annually.

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Legislative Update

by Tarna Hunter, ETF Legislative Liaison

Tarna Hunter
Tarna Hunter

As of WRS News Online publication deadlines, the following legislation affects the benefit programs of the Wisconsin Retirement System.

Legislation Passed

Group Health Insurance: Self-Insurance
2015 Act 119, provides that the Group Insurance Board, in consultation with the state’s Division of Personnel Management, notify the state legislature’s Joint Committee on Finance if it intends to execute a contract to provide self-insured group health plans on a regional or statewide basis.

Background: Last November the board’s consultant presented a number of high-level recommendations for the group health insurance program in 2017, one of which was to transition from the current fully-insured model to a self-insured model, beginning in 2018. The recommendations will be the subject of further discussion by the board in early 2016. Stay informed by reviewing the board meeting schedules, board meeting materials and agendas, found on our website.

Delay of Affordable Care Act’s “Cadillac Tax”
On December 18, 2015 President Obama signed the Consolidated Appropriations Act (Act), which, among other things, delays the onset of the Affordable Care Act’s “Cadillac Tax” until 2020. In addition, the Act requires the controller general to study the suitable benchmarks for age and gender adjustments to the tax.

Legislation Pending

2015 Assembly Bill 156 and 2015 Senate Bill 134 provide municipalities interested in participating in the Wisconsin Retirement System the option to join and only enroll in the WRS newly-hired employees, while allowing current employees to finish their careers under their existing retirement plan. Amendments that would allow employers the option to offer current employees the choice of becoming participating employees were proposed. In November the Joint Survey Committee on Retirement Systems concluded the bills and the amendments were good public policy.

2015 SB 45 and 2015 AB 70 create the Wisconsin Private Retirement Security Board, which must establish a private retirement security plan to provide retirement benefits for residents of the state who choose to participate in the plan. The board would be created within the Department of Employee Trust Funds by Chapter 15 of the Wisconsin Statutes. The bill provides that no moneys from the public employee trust fund may be expended for activities required by this bill. The Senate Committee on Labor and Government Reform held a public hearing on the bills in December. Find the recording on Wisconsin Eye.

For ETF's legislative updates between editions of WRS News Online, sign up for ETF E-mail Updates.

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SWIB CIO Recognized Among the Best

State of Wisconsin Investment Board Chief Investment Officer David Villa has been recognized by two global organizations for his work. Villa was chosen as part of Sovereign Wealth Fund Institute’s third annual Public Investor 100 list, which includes the most significant and impactful public investor executives in 2015; Villa is number 33 on the list.

Villa was also named to Chief Investment Officer Magazine’s 2015 Power 100 list. The list puts Villa at number 14 among “the most powerful asset owners in the world” based upon five categories: innovation, collaboration, talent development, fund size and asset-owner tenure.

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Health and Wellness is Top Priority

Family In Kitchen

What are the priorities of the Group Insurance Board? Member health and wellness, and making the state’s group health insurance program more efficient top the list. These issues will be at the forefront as the GIB addresses health care changes for 2017 and other longer-term initiatives at its meeting on February 17, 2016.

Among the changes to be considered by the GIB is whether to transition from the current fully-insured model for health care to self-insurance beginning in 2018. The board is not focusing on any benefit changes for members at this meeting.

Last year, the GIB directed its health care benefits consultant, Segal Consulting, to research and make recommendations in two reports on strategies for total health management, self-insurance, data management and cost containment.

What is self-insurance? Under a self-insured model, the employer (rather than an insurance company) assumes all risk and pays claims. The employer also contracts with a third-party administrator for managing provider networks, collecting premiums and processing claims. For participants, the self-insured plan typically offers the same benefits and levels of service as a fully-insured plan. Currently the state self-insures pharmacy and dental benefits, which are administered by Navitus and Delta Dental, respectively.

For More Information

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WRS Impact Far Reaching

Infographic

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SWIB Board of Trustees Appointments

The Wisconsin Senate last September confirmed the appointments of Mark Doll, Barbara Nick and Paul Stewart to the State of Wisconsin Investment Board by Gov. Walker. Their terms expire in May 2021.

Mark Doll
Mark Doll

Doll retired from a 40-year career with The Northwestern Mutual Life Insurance Company. In his recent role, he served as executive vice president and chief investment officer, where he was responsible for $164 billion in general account assets and $19 billion in separate account assets. Prior to this role, Doll was the senior vice president-public markets. He is a University of Wisconsin-Milwaukee graduate with a finance major; he also has an MBA from UW-Milwaukee.

Barbara Nick
Barbara Nick

Nick is the president and CEO of Dairyland Power Cooperative, a utility company based in La Crosse. She has more than 30 years of experience in the electric and gas industry. Additionally, she has more than 25 years of board service in energy, health care and the community. Nick is also the founder and CEO of Catto Enterprises, LLC, where she provides business and executive development services in the energy and manufacturing industries. Nick is a communications and business graduate from the University of Wisconsin-Green Bay. She also completed the Harvard Business School’s Advanced Management Program.

 

Paul Stewart
Paul Stewart

Stewart was part of a team that established PS Capital Partners in 2001 as a private equity holding firm. Previously, he was a partner at Horizon Partners, a middle market buyout firm where he was involved in all aspects of the operation including investment decisions and portfolio management. He also served as vice president in the venture capital subsidiary of Republic Bank (now Bank of America). Stewart is an adjunct professor, Bostrom Entrepreneur-in-Residence, at the University of Wisconsin-Milwaukee. He serves on the boards of PS Capital Partners’ portfolio companies. He is a graduate of State University of New York at Buffalo and majored in mechanical engineering. He also earned an MBA with a finance concentration from Texas A&M University.

For more information on the SWIB Board of Trustees, visit http://ww.swib.state.wi.us.

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Investments Affect WRS Accounts, Annuity Adjustments

The State of Wisconsin Investment Board has announced preliminary 2015 investment returns of -0.4% for the Core Trust Fund and -1.2% for the Variable Trust Fund. How will this affect your retirement account? The Department of Employee Trust Funds anticipates a modest Core effective rate increase and a slight Variable effective rate decrease this year. This information will be shown on your annual Statement of Benefits, which you will receive in April.

The projections below are based on preliminary 2015 investment returns. ETF will announce the actual effective rates and annuity adjustments after final investment returns have been determined and an actuarial analysis is completed. Watch for announcements in February (effective rates for active employees) and March (annuity adjustments for retirees).

Core Fund Projections

Preliminary 2015 Net Investment Return

-0.4%

Projected Effective Rate

6.3% to 6.7%

Projected Annuity Adjustment

0.0% to 0.8%

By law, a Core annuity adjustment is paid if the adjustment rate is at least 0.5%; if less than 0.5%, no adjustment is paid.

 

Variable Fund Projections

Preliminary 2015 Net Investment Return

-1.2%

Projected Effective Rate

-3% to 1%

Projected Annuity Adjustment

-4% to -8%

By law, a Variable annuity adjustment is paid if the adjustment rate is at least 2%; if less than 2%, no adjustment is paid.

 

To learn more:

Take in an ETF webinar on these topics -- don’t delay -- registration is required and space is limited!

  • WRS Effective Rates and Annuity Adjustments
  • Variable Fund

Check out the helpful resources in the Core/Variable Information menu on our website.

To receive immediate notification about WRS effective rates and other benefit-related news, sign up for ETF E-Mail Updates or follow ETF on Twitter.

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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

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ETF Webinars and Other Learning Opportunities

Want to know more about your Wisconsin Retirement System benefits? Whether you are planning to retire within the year or in the distant future (or somewhere in between), the Department of Employee Trust Funds has a live, interactive webinar or a public presentation right for you. Perhaps you would rather attend a group retirement appointment -- we have those, too.

Webinars
Webinars are conducted online by an ETF benefits specialist and focus on a single topic of interest. Our webinars over the next several months will cover these important topics:

  • How to use our online tool to request a retirement benefit estimate
  • How to enhance your benefit by making additional contributions
  • WRS annuity payment options
  • Choosing a retirement date
  • Five key steps to prepare for retirement
  • The Variable Trust Fund and how it affects your benefits
  • WRS employer and employee contribution rates
  • WRS effective rates and annuity adjustments

Public Presentations
ETF’s evening presentations, held in public buildings all across the state, are designed for all WRS members, especially those who are within five years of retirement. Topics covered include WRS annuity options, return-to-work rules, post-retirement annuity adjustments, the Core and Variable Trust Funds, the importance of keeping a beneficiary form up to date, purchasing service before retirement, the difference between a joint survivor and a beneficiary, and how “life event” changes affect WRS retirement benefits. All presentations run from 6:30 to 8:30 p.m.; no registration is required. To find a presentation near you, use our interactive map.

Group Retirement Appointments
Do you already have your official WRS benefit estimate but still want to connect with ETF to ensure you understand your choices? Consider attending one of our group retirement appointments. We design these sessions specifically for members who have their official estimate and are within a year of retirement. An ETF benefits specialist provides an explanation of the estimate, annuity options, the application process and answers questions. We just updated the spring 2016 group appointment schedule -- use our interactive map to find a session in your area.

To learn more:

  • To find out about scheduled educational events and to register, go to the Member Education web page.
  • Sign up for ETF E-mail Updates to receive immediate notification of upcoming educational events. Registration is free and fast -- sign up with an email address.
  • Follow ETF on Twitter!

What participants are saying about ETF webinars:
“This was the best webinar I've been to related to the WRS. Very easy to follow, excellent presenter...good pace and easy to understand. Excellent job!”

“Excellent job of presenting clear/understandable information to anyone with a 'beginner's knowledge' of retirement information. The material that was presented was easy to understand and gave a good idea as to where to start if thinking of retirement.”

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Members Want Online Services

Couple Making Decision

Members tell us they want access to their individual Wisconsin Retirement System accounts and benefits information 24/7. Above all, online services should be secure, convenient and quick. The Department of Employee Trust Funds is taking your needs to heart in developing the new benefits administration system, called myETF Member Online Services.

Last fall ETF surveyed WRS members to find out about the service capabilities they want in the new system. Thank you for sharing your valuable feedback.

More than 90% of respondents rated the ability to access their individual WRS accounts and benefits information, and to check the status of a service request or payment as important. They also want the option to meet with or talk with a benefits specialist, if needed.

A whopping 98% of respondents said they would use online services. With myETF Member Online Services, members will be able to:

  • Enroll in insurance and other services offered by their employer
  • Check WRS account balances
  • Update their personal information (e.g., address, dependents and beneficiary designations)
  • Register for ETF educational events
  • Receive information specific to their accounts
  • Make personalized benefit calculations
  • Change annuity tax withholding
  • And more

You will experience secure online services similar to those offered by financial institutions. In addition, these system and process improvements will allow ETF to focus on providing higher levels of customer service.

The multi-phase development of myETF Member Online Services will span several years with the first phase now projected for roll out in 2018. The first phase will replace the current myETF Benefits, which is limited to enrollment processing for health insurance, and allow members to access their health, life and Income Continuation Insurance benefit information. Once fully completed, the new system will provide online services for all ETF-administered benefits.

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ID Cards: Important Reminders

Woman Holding card

Most participants in the group health insurance program should have received new ID cards from their health plans and dental plans (if enrolled) for 2016. If you have not received your card(s) by the end of January, contact your plan.

It’s a good idea to:

  • Review the card for accuracy. Are all of your dependents listed accurately?
  • Remember that “latest is greatest” -- if you receive more than one set of cards, always carry the most recent with you.
  • If you are participating in Uniform Dental Benefits for 2016 and have not received your new ID card, you can print one online. Present this card when receiving dental services, and tell your provider this is new coverage if you had Delta Dental previously through your health plan. Please note that the ID card is not required to receive benefits; if you do not have your card, simply provide your name and date of birth to your dentist office instead.
  • You will not automatically get a new Navitus ID card for prescription drug coverage for 2016, unless you have the Navitus MedicareRx Medicare Part D prescription drug coverage. Contact Navitus or Navitus MedicareRx directly if you have questions.
  • State employees: If you have VSP vision insurance, you will not receive a card -- but you can print one online. VSP assigned new member numbers for 2016. When your provider looks up your coverage, suggest they use your name and date of birth if your coverage doesn’t show under the member number in the doctor’s records.

Preventive Care: Everyone needs an ounce of prevention
Are you and your loved ones up to date on your preventive care? Use the Centers for Disease Control and Prevention Checklist to learn about recommended preventive services based on age and gender. Federal law requires the cost of certain preventive services be covered at 100% with no deductibles or copayments. Contact your health plan or healthcare provider for more information on scheduling a visit specific to no-cost preventive services. More information can also be found in the It’s Your Choice FAQ for state and local participants under Benefits and Services.

Want to stay up-to-date on health and wellness benefits and related topics? Sign up for It’s Your Choice e-alerts via ETF E-mail Updates.

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ETF, SWIB Board Meetings in 2016

2016 WRS Governing Board Meetings
The issues discussed and decisions made by the five governing boards of the Wisconsin Retirement System affect the benefit programs administered by the Department of Employee Trust Funds. The 2016 meeting schedule for these boards has been set, as indicated below. Meetings are open to the public. Agenda items are posted one week prior to each meeting. Review meeting dates, agendas, materials and learn more about the WRS governing boards.

ETF Board, Teachers Retirement Board, Wisconsin Retirement Board
March 24, June 23, September 29, December 15
Meetings held at the State Revenue Building, 2135 Rimrock Road, Madison

Group Insurance Board
January 7, February 17, May 18, August 16, November 15
Meetings held at the Lussier Family Heritage Center, 3101 Lake Farm Rd., Madison

Deferred Compensation Board
March 8, June 14, November 1
Meetings held at the Department of Employee Trust Funds, 801 W. Badger Rd., Madison

2016 SWIB Board of Trustees Meetings
State of Wisconsin Investment Board of Trustees meetings are set for 2016, as indicated below. All meetings are held in the Board Room at SWIB, 121 E. Wilson St., Madison, unless otherwise stated. Agendas are posted the Monday before each meeting. Review meeting dates, agendas and open meeting materials.

January 13
February 10
March 8-9
April 13
June 7-8
August 10
September 14
October 19-20
November 16
December 14

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Abandoned Accounts

Every January ETF publishes a notice of individuals age 70 or older who have “abandoned” WRS accounts. Members or their heirs have 10 years after published notification to apply for the benefit.

The list of individuals with abandoned WRS accounts and their benefit application deadlines is now on our website. If you know the whereabouts of anyone on this list, please ask them or their heirs to contact ETF.

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Last Revised: January 21, 2016
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