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Projections for Effective Rates, Annuity Adjustments

The State of Wisconsin Investment Board has announced preliminary 2016 investment returns of 8.5% for the Core Trust Fund and 10.6% for the Variable Trust Fund. How will this affect your Wisconsin Retirement System account?

The projections below are based on preliminary 2016 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 2016 Investment Return

8.5%

Projected Effective Rate
applied to employees' account balances

7.6% to 8.0 %

Projected Annuity Adjustment
applied to retirees' monthly payments beginning May 1, 2017

1.3% to 1.9%

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

Variable Fund Projections

Preliminary 2016 Investment Return

10.6%

Projected Effective Rate
applied to employees' account balances (if applicable)

9.0% to 13.0%

Projected Annuity Adjustment
applied to retirees' monthly payments beginning May 1, 2017 (if applicable)

4.0% to 8.0%

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

Shared Investment Risk
WRS members benefit from good investment returns and share the risk of poor returns. Changes in employee and employer contribution rates, for example, are linked to Core and Variable Trust Fund investment performance. Likewise, annuity adjustments for retirees are linked to investment performance. This "shared risk" design keeps the WRS well-funded and able to pay promised benefits long into the future.

Plan Ahead
No matter your timetable for retirement, it's important that you know about and fully understand your retirement benefits. This includes the fact that the WRS does not provide a guaranteed cost-of-living adjustment (COLA) in retirement.
In addition, did you know:

  • Some pension systems provide COLAs in order to help retirees keep up with inflation over the long term. Under the WRS, post-retirement annuity adjustments are by law dependent on WRS trust fund investment returns.
  • WRS retirees routinely receive annuity increases above the cost-of-living adjustment for Social Security; for 2016 Social Security increased only 0.3%.
  • When retired, your Core annuity can never go below your original payment ("floor").
  • However, annuity adjustments can increase or decrease each year, based on trust fund investment performance and actuarial factors.
  • When there is a market downturn, annuities can be lowered by repealing previously-granted increases.

For more information:

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