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WRS News Online Vol. 4, No. 2 - May 2018

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Health Screenings in Madison

Take steps to reach your health and well-being goals while earning your $150 Well Wisconsin incentive* at the same time! Well Wisconsin health screenings are available May 17 at Monona Terrace and June 21 and August 21 at Clarion Suites at the Alliant Energy Center. Learn more about the Well Wisconsin Program and schedule your health screening appointment today.

*The Well Wisconsin Program is available to employees, retirees, and spouses enrolled in the State of Wisconsin Group Health Insurance Program. All wellness incentives paid to participants are considered taxable income. Program deadline: October 19, 2018.

 

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Review Your Statement of Benefits

Take a few minutes to review your Wisconsin Retirement System annual Statement of Benefits. This important document is a summary of your year-end retirement account information. Keep your statement with your important paperwork.

Here are some essential things to know and do:

  1. Check your 2017 earnings and years of creditable service for accuracy. Contact your employer if you have concerns about reporting errors. Contact ETF for other questions.

  2. Check employee required and employer required contributions.

    • Note how much you and your employer contributed to your account and how much your account balances changed with the effective rate of interest. This rate changes from year to year, depending on investment returns. Here is more information about how WRS trust fund investment returns have affected both the effective rates and annuity adjustments (for retirees) since 1986.

    • Contributions paid by you and your employer (plus applicable interest) constitute your Money Purchase Balance. (See Section 9)

    • When you retire, ETF calculates your benefit estimate using both the formula calculation and the money purchase calculation. Your retirement benefit will be the higher of these two calculations. (See Section 10)

  1. Check Section 4, additional contributions. Did you know you can add money to your WRS retirement account and these deposits receive the effective rate of interest? Additional contributions are a great way to supplement your retirement income. Learn more about how additional contributions enhance your benefits.

  2. See Section 5 and confirm that your beneficiary designation is accurate. Remember: Life events like divorce, marriage, and birth of a child do not automatically change your beneficiary on file with ETF. Do you need to update your beneficiary designation? Complete the Beneficiary Designation form (ET-2320) and send to ETF.

  3. Check your contact information. Is it current? To ensure that you continue to receive important, time-sensitive notifications about your WRS account, keep your mailing address, email and telephone number up to date with ETF. You can change this information by completing an Address/Name Change form (ET-2815) or contact ETF.

For More Information

  • Check out our online resources, including interactive sample statements and answers to frequently asked questions.

  • Sign up for our webinarUnderstanding Your Annual WRS Statement of Benefits

    Statement of Benefits

 

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Effective Rates Applied to Your WRS Account

The effective rates of interest have been applied to your retirement account. Review your latest annual latest annual Statement of Benefits, which was distributed in April, to learn how the rates affect your account balances.

Both the effective rates (for active employees) and annuity adjustments (for retirees), are based on investment performance of the Wisconsin Retirement System trust funds and shown in the table below:

 

Core Trust Fund

Variable Trust Fund

Calendar Year 2017
Investment Return
(gross of fees)

16.2%

23.2%

Effective Rate
(applied to employees' account balances)

8.5%

24.0%

Annuity Adjustment (applied to retirees' monthly payments)

2.4%

17.0%


Shared Risk and Reward

Investment risks and costs of the WRS are shared between all members. For employees and employers, contribution rates are generally split evenly and adjusted annually, based on trust fund investment performance. Investment gains in one year tend to put downward pressure on rate changes for the next. The Employee Trust Funds Board will set 2019 contribution rates at its June meeting.

For retirees, post-retirement adjustments (dividends) also depend on investment performance. There is no guaranteed WRS cost of living adjustment for retirees. Rather, annual annuity adjustments (dividends) are based on trust fund investment experience and the current and future funding needs of the WRS. Increases are granted when there is an excess in the annuity reserve. Past increases can also be repealed (in the form of negative annuity adjustments) when there is a shortfall.

For More Information

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SWIB Remains a Low-Cost Manager

Internal and External Assets and Costs

Managing the Wisconsin Retirement System trust funds involves more than determining a good investment strategy. Developing a disciplined, prudent, and innovative investment strategy is what we do to mitigate against losses, keep contribution rates stable, and generate reasonable returns. In addition, the State of Wisconsin Investment Board's cost optimization efforts help ensure the WRS can meet its obligations today and in the future.

"Our cost optimization is one reason the WRS remains financially strong," SWIB Executive Director Rick Smirl said. "Our internal management of a majority of the trust funds, combined with other cost – saving initiatives and our sophisticated investment strategy, helps fuel one of the best-funded public pension systems in the country."

SWIB is a low-cost public pension fund manager when compared to other large U.S. public pension funds, according to CEM Benchmarking, an independent cost effectiveness consultant. SWIB's cost of 43 cents per $100 is below the peer median of 56 cents per $100 under management, as of December 31, 2016, the most recent peer comparison data available from CEM. SWIB is able to keep its costs below the peer median in part because of the use of more internal management, a lower allocation to higher cost assets, and paying less for external management.

Using more of its own staff to manage assets, investing in fewer higher costs assets, and negotiating lower external fees represented a total savings of approximately $110 million in 2016. A majority of that savings, approximately $71.8 million, came from SWIB managing more assets internally — approximately 62% of the assets — and passively — approximately 38% of the assets, than its peers.

Maintaining a lower-cost internal management program requires the ability to attract, hire, and retain qualified staff. Over the past few years SWIB's Board of Trustees have worked with a consultant to manage an incentive compensation program that motivates staff to seek high returns at reasonable costs and controlled levels of risk, which aligns with the interest of the WRS.

Reducing costs has contributed to the value added above market returns to the trust funds, which, after costs, has been significant: approximately $759 million over the past five years, ending December 31, 2017.

"We will continue to protect and grow the assets that more than 622,000 participants and 1,500 employers of the WRS count on for a more secure financial future," Smirl said.

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Hill Farms State Office Building

ETF Relocates to New Hill Farms State Office Building

The dust is beginning to settle! At the end of March the Department of Employee Trust Funds moved into the new Hill Farms State Office Building on Madison's west side, consolidating operations, services and staff into one modern facility.

The 600,000-square-foot Hill Farms building offers convenient visitor parking, state-of-the-art technology, training and private counseling rooms. ETF is leasing floors 7, 8 and 9 of the building's north tower.

Please review the important information for visitors to help you easily get from the parking ramp to the ETF reception area on the 8th floor.

The Hill Farms building is located at the corner of North Segoe Rd. and University Ave. The address is 4822 Madison Yards Way, Madison, WI, 53705-9100.

Seven other state agencies also call the building "home":

  • Department of Administration-Division of Hearings and Appeals

  • Department of Financial Institutions

  • Department of Safety and Professional Services

  • Department of Transportation

  • Higher Education Aids Board

  • Office of the Commissioner of Railroads

  • Public Service Commission

ETF telephone numbers, website and customer service hours have not changed. You can receive assistance any time by calling 608-266-3285 or toll free at 1-877-533-5020, 7:00 a.m. to 5:00 p.m. (CST), Monday-Friday. As always, please send forms and correspondence to ETF at P.O. Box 7931, Madison, WI 53707-7931.

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The Great Recession: 10 Years Later

This is the second in a three-part series that looks back at the Great Recession, its effect on the Wisconsin Retirement System, and how the State of Wisconsin Investment Board invests first to help protect the pension system during another major downturn and then to earn reasonable returns.

From December 2007 to June 2009, the United States suffered through the worst economic downturn since the 1930s. The Great Recession left the country desperately trying to recover from an economic tailspin. The Wisconsin Retirement System, like many public pension funds, felt the impact of the downturn. WRS retirees experienced negative annuity adjustments for the first time ever; active employees and employers also saw increases in contribution rates.

Despite the downturn, the WRS remained among the best-funded public pensions in the country, in part, because of SWIB's strong long-term performance. Since the Great Recession, the financial markets have had dramatic swings that have proven challenging for many investors. To help meet those challenges, SWIB implemented a relatively conservative investment strategy. This strategy is designed to weather a variety of economic environments and at the same time ensure the system continues to meet its obligations today and in the future.

"SWIB has been, and continues to be, a long-term investor," SWIB Chief Investment Officer David Villa said. "Historically, markets tend to be cyclical and decline after a few years of strong performance. Because SWIB is a long-term investor, it can be more patient than many other investors. However, it must also be responsible and committed to a well-thought-out plan that provides the best value to all WRS participants in the long run."

SWIB's strategy is designed to mitigate the effects from another major market downturn, and still to earn reasonable returns. With the help of its investment consultant and approval from the Board of Trustees, SWIB has slowly reduced the trust funds' reliance on the stock markets to achieve consistent performance. The Core Fund is a broadly diversified portfolio of stocks, bonds, private equity, real estate, hedge funds, and other investments. The investment goal of the Core Fund is to earn an optimum rate of return while taking an acceptable level of risk.

"We have slowly reduced the variability of Core Fund returns by investing a modest allocation of assets in volatility-reducing strategies," Villa said. "These strategies are designed to help limit the impact of significant market downturns and include multi-asset strategies, which are often designed to distribute volatility more evenly over asset classes."

Measured alone or over the short-term, these multi-asset strategies may underperform the market. Measured within the context of the entire trust fund over the long term, however, these strategies provide diversification and allow the plan to mitigate the impact of severe market downturns.

SWIB works to find the right asset allocation – one that doesn't take too much risk, or one that is too conservative and doesn't generate enough returns to fund the WRS. For the strategy to work, SWIB must adapt to the challenges of the market.

"For the WRS that means an allocation that strives to produce returns that keep contribution rates affordable, generate positive annuity adjustments, avoids annuity reductions, and maintains a fully-funded retiree reserve," Villa said.

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How Are My WRS Benefits Taxed?

For more information, review our brochure, Tax Liability on WRS Benefits (ET-4125).

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Teach Me How to Retire

Have you decided to retire within the next 6 to 12 months? Congratulations! That milestone may be the hardest part of the entire process. ETF can help you understand and master the next steps so that you make decisions that are right for you.

Here are a few things for your retirement planning "to do" list:

  1. Obtain an official retirement estimate by completing our retirement online estimate request or contact us.

  2. If you want an unofficial retirement estimate, use our WRS Retirement Benefits Calculator to run your own benefit projection. Helpful hint: Have your last annual Statement of Benefits in hand so you can enter data that mirrors your WRS account information. This is also a way to compare a variety of retirement dates. If you participate in the Variable Fund, first use the Variable Excess/Deficiency Calculator to project this portion of your benefit. 

  3. Learn as much as you can about Wisconsin Retirement System annuity options, post-retirement annuity adjustments, what to expect in your first year, protecting beneficiaries, health insurance and sick leave conversion credits and much more. Our forms and brochures and webinars cover all of these topics. In addition, attend an ETF-hosted benefits presentation in your area.

  4. Retirement is a multi-step process. Do you want to know more about the process and develop a plan for retirement? This recorded ETF webinar will help you think through many key issues.

For those with completed retirement estimates: If feel you need to talk to someone to better understand your options or the process, consider making an appointment with a benefits specialist.

We have three convenient types of appointments: online, individual or group. For a list of group retirement appointments in your region, see our interactive map. To schedule an appointment, contact ETF.

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Transitioning Your Health Benefits into Retirement

How will your health benefits change in retirement? What happens when you become eligible for Medicare? Find out everything you need to know about transitioning your health benefits into retirement and post-retirement health benefits under the Group Health Insurance Program with this our short, five-part video series and accompanying resource sheets. View the video series »

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What is a Data Warehouse?

Last year the Department of Employee Trust Funds began with a third–party administrator to build a "data warehouse" – a centralized, secure repository of data pertaining to the State of Wisconsin Group Health Insurance Program. At this point ETF and the vendor, Truven Health Analytics, are nearing completion of loading enrollment information, claims (e.g., medical, pharmacy, dental) and wellness data from 2014-2017 into the repository.

In general, the data collected will help ETF and the Group Insurance Board keep health insurance premiums manageable and improve members' health outcomes.

Benefits of a Data Warehouse

ETF will be able to closely monitor participating health plan and provider performance, compare findings to cost and quality measures, and develop incentives to improve performance.

In addition, ETF will use the data to better understand members' overall health needs and identify opportunities to improve health and quality of care. For example, a recent "snapshot" of member data provided statistics about:

  • The number of members who had – and did not have – preventive care visits and services in 2016

  • Overall adherence to care guidelines for such chronic conditions as coronary artery disease and diabetes

  • The number of members seeking care for low back pain, depression, asthma, etc., and associated cost trends

Please note that HIPAA privacy and security requirements governing the use of data will be strictly enforced. ETF and its consultants cannot access member-identifiable information in the data warehouse. In addition, member-level data will never be shared with employers. The GIB will be limited to reviewing summary reports on health plan performance, spending, utilization and member health outcomes.

For More Information
FAQ: Data Warehouse for Health Claims and Related Data

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StayWell Helps with Pain Management

Are you looking for ways to manage pain in a safe and effective way? Log into wellwisconsin.staywell.com to participate in a confidential pain management series to build knowledge on preventing, managing and discussing pain with your physician. While you're logged into the portal, complete your steps to earn your $150 Well Wisconsin incentive.

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Villa Recognized Among Top Investment Leaders

David Villa
David Villa

SWIB Chief Investment Officer David Villa has been named to Chief Investment Officer magazine's Power 100 list.

Villa is No. 17 on this year's list, which ranks investment leaders from around the world based on fund size, tenure, talent development, collaboration and innovation. His name has appeared on each Power 100 list since Chief Investment Officer magazine's first list was released in 2012.

"SWIB is fortunate to have the experience that David brings to the investment world available to us," Rick Smirl, SWIB executive director, said. "He is just one of the many talented professionals that make SWIB a global leader in pension investing."

Chief Investment Officer provides the latest news, opinion and research focusing on the overarching investment issues affecting public and corporate pension plans, endowments, foundations, healthcare capital pools and sovereign wealth funds.

 

 

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Hotline for Reporting Fraud and Abuse

At the Wisconsin Department of Employee Trust Funds, protecting the integrity of the Public Employee Trust Funds and the employee benefit programs we administer is central to our operating mission. To that end, ETF has contracted with Ethical Advocate, an independent, third–party administrator, to manage an anonymous and confidential hotline for reporting fraud, abuse or other unethical actions.

You can report an incident to the Ethical Advocate Hotline any time, by phone or secure online portal:

If you have benefits-related questions or complaints, please contact ETF benefit specialists at 1-877-533-5020.

Thank you for allowing ETF to serve you and helping us maintain the highest standards of ethical conduct.

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Online Appointments: Convenient, Easy

If you are nearing retirement and have your retirement estimate in hand:

  • Do you have questions about your options or the retirement process itself?

  • Are you unable to wait for the next available in-person appointment with an ETF benefits specialist?

Then try an online retirement appointment! These appointments are secure, private retirement appointments with an ETF benefits specialist. You and the specialist talk by telephone and simultaneously review – online – your estimate and annuity payment options and address your questions. Online appointments are convenient and easy to schedule. To schedule an online appointment Contact ETF.

Here is what some members are saying about their experience:
"It was great because I didn't need to take a full day to drive to Madison, park, etc. I had done research in advance, but also wanted to have confirmation that I understood everything. This appointment certainly helped me meet this goal, and the advisor was easy to work with and made me feel comfortable."

"[The specialist] did an excellent job making us feel comfortable and walking us through every step of the way. Outstanding job."

"I hope you continue the use of these appointments, as it was so convenient and with the webcam made the appointment feel almost as if you were face to face... I now feel comfortable with my selection as I head into the next chapter – retirement!"

"Just awesome... to be able to sit in my home, not drive two hours – one way – makes the retirement process easier by far. [The specialist] was very personal, professional, and knowledgeable. Thank you."

"[Reviewing] the application online was great for me. Having someone to explain everything in a professional and easy process was so nice. The fact I didn't have to drive to Madison was huge. [The specialist] was able to show me all the forms and explained things in a systematic order that made it easy to understand. I would recommend this process to anyone needing a retirement appointment."

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Przybylski to Serve on Teachers Retirement Board

Anton Przybylski
Anton Przybylski, Jr.

Anton "Tony" Przybylski, Jr. a mathematics instructor at Madison College, has been appointed to the Teachers Retirement Board. Przybylski will serve as the technical college teacher member of the board.

Przybylski was the only candidate to return nomination forms by the filing deadline for this position last fall. As a result, he was automatically seated and no board election was conducted.

Przybylski has taught at Madison College for 13 years and held previous mathematics teaching positions at Oregon Institute of Technology and Mohave Community College. Przybylski takes the seat of the board's outgoing technical college teacher member, R. Thomas Pedersen and his term expires in 2023.

 

 

 

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Nowak Joins SWIB Board of Trustees

Ellen Nowak
Ellen Nowak

In March Gov. Walker appointed Ellen Nowak to serve as the Department of Administration secretary. Therefore, Nowak will replace former DOA secretary Scott Neitzel on the SWIB Board of Trustees.

Nowak was appointed to the Public Service Commission by Gov. Walker and was named PSC chairperson in 2015. Prior to her time at the PSC, Nowak served as the chief of staff to Waukesha County Executive Dan Vrakas and as legal counsel and subsequent chief of staff to Wisconsin State Assembly Speaker John Gard.

Nowak has a law degree from Marquette University and a Bachelor of Science degree from the University of Wisconsin-Milwaukee.

 

 

 

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SWIB Board Materials, Reports Available Online

The State of Wisconsin Investment Board posts publications and materials online to make information easily accessible to Wisconsin Retirement System members.

Open meeting materials for the SWIB Board of Trustee meetings – including meeting minutes – are available on SWIB's website, on the Board Meetings page.

You also have access to several SWIB publications and statutory reports, including:

Current and archived reports can be found on the Publications page.

 

Last Revised: April 26, 2018
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