WRS News Online

A Look at WRS 2015 Financials

The Wisconsin Retirement System paid out more than $4.8 billion in benefits during 2015. Sound funding and plan design principles keep the WRS financially strong. It's the 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, will be published in ETF's 2015 Comprehensive Annual Financial Report and available on our website at a later time.

WRS Assets and Reserves

As of the end of 2015, the WRS had net assets of more than $88.5 billion, a decrease of $3.6 billion from 2014. The decrease was related primarily to the decrease in investment earnings in 2015. 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 $)
  2015 2014
Assets    
Stocks $47,185 $50,725
Bonds 24,955 27,139
Other Investments 16,092 15,692
Other Assets and Liabilities 273 (1,409)
Net Position $88,505 $92,147
Reserves    
Annuity Reserve
Employer Reserve
$52,925
22,003
$51,133
22,030
Employee Reserve 16,707 16,403
Market Recognition Account (3,230) 2,463
Other Reserves 100 118
Total Reserves $88,505 $92,147

 

Wisconsin Retirement System
Statement of Changes in Net Assets
(millions $)
  2015 2014
Revenues    
Investment Income $(675) $4,889
Employer Contributions 978 1,023
Employee Contributions 937 906
Other Income 2 3
Total Revenues $1,242 $6,821
Expenses    
Annuities and Other Benefit Expense $4,823 $4,540
Separation Benefits 38 34
Administration 23 24
Total Expenses 4,884 4,598
Deduction to Net Assets $(3,642) $2,223

 

$52.9 billion of reserves are set aside to pay monthly benefits to our approximately 192,000 retirees; the average annual benefit is $24,780. 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 420,000 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 $3.2 billion in past investment losses that will be applied against income or investment gains over the next four years.

WRS Revenues and Expenses

Investment income decreased by $5.6 billion due to less than favorable market conditions in 2015 compared to 2014. However, employee and employer contributions remained relatively stable at $1.9 billion.

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 $4.9 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.