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WRS News Online Vol. 3, No. 2 - May 2017

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Health Insurance Update

For State of Wisconsin Group Health Insurance Program Participants

In February the Group Insurance Board approved moving to a self-insured/regionalized program structure for the group health insurance program, starting in 2018. The decision to change from the current fully-insured program structure capped off an intense year of discussion, review, and analysis of options and bids from third party administrators competing to provide administrative services for the program on behalf of our approximately 250,000 participants.

At the time WRS News Online was published, contract negotiations were underway with the third party administrators whose winning bids were selected at that February meeting. Wisconsin regions and participating health plans under the proposed plan to regionalize the structure of the health insurance program are shown in the accompanying map.

Ninety-eight percent of the current health care providers will be available under the new model, including those of Group Health Cooperative of South Central Wisconsin. GHC providers have contracted with Quartz to offer services starting in 2018. ETF estimates the vendors' broad networks will provide access to more Wisconsin providers than under the current program, and that participants will be able to choose from two to three vendors in each region. ETF will provide online tools to easily find covered health care providers. Watch for information in early summer.

Note: The 2017-2019 executive state budget anticipates the GIB will transition to a self-insured health model (See Legislative Update). The contracts with the third party administrators must be sent to the Joint Committee on Finance for review, as required by 2015 Act 119. The JCF has the authority to reject the contract(s).

The Board's February decision, combined with wellness and improved data analytics efforts already underway, center on improving health outcomes and quality of care, maintaining current benefit levels, ensuring quality provider access, and containing program costs.

For More Information

 

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Upcoming Well Wisconsin Expo, Wednesday Webinars

Well Wisconsin Expo and Webinars

Special Event: Third Annual Well Wisconsin Expo

If you are in the Madison area, be sure to attend the 2017 Well Wisconsin Expo on Wednesday, May 10 from 10:00 a.m. to 2:00 p.m. at the Monona Terrace Community and Convention Center. Hosted by the Department of Employee Trust Funds, this free event features more than 30 organizations with information on health plan resources, financial wellness, nutrition, and health awareness. Those eligible for the Well Wisconsin incentive can also complete a biometric screening. Pre-registration is required. To register for a screening log in to wellwisconsin.staywell.com and click on the screening button. For more information about the Well Wisconsin Expo, review the promotional flyer.

Well Wisconsin Wednesday Webinar: Sound Science for Sound Sleep

Check out this webinar filled with great information about ways to improve your sleeping habits for a good night's sleep and better energy overall. This one-hour webinar is set for Wednesday, May 17 at noon. Join us! Register via the Well Wisconsin portal.

Other planned webinars:
  • June 21 — Get a new perspective on mindful living and approach each day with mindfulness!
  • July 19 — Separate fitness facts from myths for better wellness.
  • August 16 — Simple tricks and tips to make healthy living fit into your hectic lifestyle.

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Steve - Middle School Teacher
Steve

Why Are You in Public Service?

"Every day I have the opportunity to make a difference in the lives of the kids that I am honored to teach. I challenge myself to consistently keep that idea clearly in focus. If I am successful, I wholeheartedly believe that I am also helping to make Wisconsin a better place — one learner, one class, and one 'aha!' moment at a time."

Steve, middle school teacher and WRS member, Ashwaubenon, WI

Why are you in public service? Tell us why you are working to serve the public, your community and the people of Wisconsin. Take our survey today!

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Michael Williamson, SWIB Executive Director
Michael Williamson

SWIB: Paying for Performance Works
by Michael Williamson, SWIB Executive Director

This is the time of year when I get questions about incentive compensation payments. SWIB's Board of Trustees recently approved staff incentive compensation awards in recognition of investment performance that added $42 billion to the WRS Trust Funds over the past 10 years. I want to take this opportunity to talk with you about those payments and why they are important.

When we at SWIB determine how to invest the $100 billion in WRS assets, we analyze whether it makes more sense to use external managers to invest the assets or whether we can manage them with our internal staff. We have steadily moved in the direction of increasing the assets we manage internally, and are currently managing $65 billion with our SWIB staff. The reason for this shift is that external investment managers cost the WRS multiples more than what it costs for SWIB's own staff to manage those assets. In addition, using internal staff gives us more control over the investments. To make our strategy successful, SWIB needs to hire talented and skilled staff who could otherwise work for an asset management firm that is willing to pay high salaries and performance-based incentives. Luckily, this is Wisconsin, which means we do not have to pay the same level of salaries as money managers on the East and West coasts. Our Board understands this and has targeted compensation payments to align with the median of a conservative peer group that includes banks and insurance companies in the Midwest. These are the organizations that we compete with for talent; they know how difficult it is to find and keep good staff and use competitive compensation levels to help them do so. Our compensation plans exist to allow us to hire and keep the highly skilled staff we need to prudently and effectively manage our investment strategy.

So, while we do not have to pay Wall Street salaries, there is an area where we are similar. Both of our compensation plans are based on performance. When performance is good, incentive compensation payments increase and conversely, when performance targets are not hit, compensation payments decline. We have found that paying for performance works. We compensate employees based on contributions to organizational performance and risk adjusted investment returns above market returns over the same five-year period that is used for determining retiree dividends. And that five-year performance above our benchmarks has been good.

As of the end of 2016, the five-year return for the Core Trust Fund was 8.6%, which was ahead of its benchmark of 7.7%. The return for the Variable Trust Fund was 10.6%, also ahead of its benchmark. That translates into $1.2 billion more than the market generated during the same period. And that is what we are paid to do — generate better returns for the WRS and our members than the market provides to most investors.

While SWIB's incentive compensation payments may seem high, even unnecessary to some, hiring skilled investment professionals saves money and generates better returns for the WRS and for you, our members. Our focus is not just cost. We are focused on value, and this system is generating value. Our incentive compensation plan is designed to attract and retain highly qualified professionals to manage the WRS trust funds. By almost any measure, the plan is achieving its desired results. Our performance in 2016 ranked in the top 25% of pension plans with more than $1 billion in assets. We have been able to attract and retain skilled professionals, which was not possible prior to the implementation of the plan. Even accounting for our incentive compensation payments, we have lower costs relative to those of our peers. In just 2015 alone, we cut almost $75 million off what it cost our peer pension systems to manage similar investments. And here is the kicker: Our entire internal budget in 2015 was just $53.5 million. Using our talented internal staff has helped us lower costs and generate strong returns.

I hope that you will think of our incentive compensation as an investment in value that pays off for the WRS now, and in the future.

 

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SWIB Makes Investments in Wisconsin Businesses

Wisconsin Welcomes You

Starting and growing a successful business is not easy. It may start with an idea, but between that idea and the goal is a great deal of planning and hard work to develop a blueprint for success.

Wisconsin has a long history of entrepreneurs who have taken their ideas and plans and grown them into thriving businesses. Some businesses are small and employ just a handful of people, while others have grown into multi-billion dollar corporations that do business in all four corners of the globe. The State of Wisconsin Investment Board is proud to have been part of the blueprints for success for many of those businesses.

Through targeted and strategic investments, SWIB has been able to help several businesses across the state write success stories that have benefited Wisconsin's economy. At the same time, those investments have generated solid returns with acceptable levels of risk for the trust funds SWIB manages, including those of the Wisconsin Retirement System.

SWIB has made significant investments in Wisconsin-based companies. As of June 30, 2016, SWIB had total investments of almost $17 billion in companies with some level of employment and operations in the state. In the last five years, new investments in Wisconsin companies totaled over $997 million, with projections for new investments over the next five years to reach as much as $1.6 billion.

But it is more than just Wisconsin businesses that have benefitted from the significant commitment SWIB has made to the state. The solid investment returns SWIB has realized have helped fuel one of the only nearly 100% funded public pension plans in the country. One reason the WRS is well funded is investment earnings: these account for approximately 75% of the total income of the WRS over the last 10 years.

SWIB's impact goes beyond investments. SWIB's professional investment staff is active in Wisconsin's venture capital and small business development. In addition to actively marketing its debt financing portfolio to Wisconsin companies, SWIB is a sponsor of several venture capital events and programs such as the Wisconsin Early Stage Symposium, BioForward's Annual Meeting, and the Greater Madison Area Chamber of Commerce Pressure Chamber event. SWIB partners with early-stage entrepreneurial business incubators such as gener8tor. SWIB staff also works to connect small businesses with financing options and available business support services.

SWIB is a unique asset and a valuable partner that provides a strong, steady economic pillar for the people and the state of Wisconsin. SWIB will continue to search for opportunities that provide positive investment returns for the trust funds it manages while improving the state's economy at the same time. By building on a long history of identifying and investing in promising state companies, SWIB looks to continue to be part of the blueprints for success for many Wisconsin businesses.

For more information about SWIB's investments in Wisconsin, read our publication, Goals for Investing in Wisconsin.

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Tarna Hunter, Legislative Liason
Tarna Hunter


Legislative Update
by Tarna Hunter, Director of Strategic Engagement and Government Relations

In February Gov. Walker released the 2017-2019 executive state budget, a proposal of how the state should manage expenses for the next two years. The budget bills, called 2017 Assembly Bill 64 and 2017 Senate Bill 30, are currently before the Joint Committee on Finance. The JCF has spent the last few months reviewing the proposed budget and will continue to review and make changes over the next few weeks. After JCF makes its recommended changes, the budget goes to the assembly and the senate for further review and, ultimately, back to the governor for signature. The governor can also veto the bill in whole or in part.

As proposed, the budget currently contains a few changes that affect the benefit programs administered by the Department of Employee Trust Funds. The budget modifies the Chapter 40 domestic partnership program, including discontinuing allowing employees to enter into new domestic partnerships after the effective date of the bill and eliminating health insurance coverage for domestic partners, effective January 1, 2018.

In addition to the above provisions, the budget anticipates the Group Insurance Board will transition to a self-insured health benefit model. The projected savings from the move to self-insurance are $60 million (in General Purpose Revenue) over the biennium. For more detail, see Health Insurance Update.

Other legislation includes a proposal under development that would increase the minimum retirement age by two years for protective occupation members and by five years for all other members.

Currently, general employees, teachers, elected officials and executive employees are eligible to retire at age 55; the bill would change that to age 60. Protective employees, such as police and firefighters, are currently eligible to retire at age 50; the bill would change that to age 52. The proposal would also change the formula method for calculating a WRS retirement benefit — basing it on the average of the five highest years of earnings instead of the three highest years. These changes would only apply to members hired after the effective date of the bill.

ETF's Government Relations web page is a great way to stay informed about state and federal legislation that may affect WRS pension, insurance and other benefit programs. In addition to laws passed by legislative session, we also list legislative proposals, laws and proposals from previous sessions, recent ETF action items and benefit news.

For More Information

 

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Review Your Statement of Benefits

Have you reviewed your Wisconsin Retirement System annual Statement of Benefits? The statement is a summary of your year-end retirement account information that will eventually be used in benefit calculations. Keep your statement with your important paperwork — you receive this document only once a year and it contains a lot of great information about your benefits!

Top 5 things to do with your WRS annual Statement of Benefits:

  1. Check your 2016 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 Section 3, your employee required contributions.
    • Note how much you contributed 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 trust fund investment returns and how they have impacted effective rates and annuity adjustments since 1986.
    • Did you know your employee required contributions balance is matched by your employer? Contributions paid by you and your employer (plus applicable effective rate 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)
  3. Check Section 4, additional contributions. Did you know you can add money to your WRS retirement account — and that it receives the effective rate of interest? See Effective Rates Applied. You can make additional contributions anytime during your working years. Learn more about how making additional contributions enhances your retirement benefit.
  4. See Section 5 and confirm 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. Need to update your beneficiary designation? Download a new WRS Beneficiary Designation form (ET-2320) from our website, complete it and send to ETF.
  5. 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. You can change this information by completing an Address/Name Change form (ET-2815) or contact ETF.

Account Contact Information
It is important that you keep your account contact information (name and mailing address) current. In 2018, ETF plans to distribute all statements by postal mail and begin offering 24/7 access to your Statement of Benefits via the secure myETF Member Online Services.

For More Information

  • Check out our new online resources, including interactive sample statements and answers to frequently asked questions.
  • Sign up for our webinar, Understanding Your Annual WRS Statement of Benefits

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New! Web Resources to Help You Navigate Your Statement

Web Resources

ETF has rolled out new online resources to help you review and understand your Wisconsin Retirement System annual Statement of Benefits.

The statement is a summary of your WRS pension account, including year-end balances, beneficiary designations and other important account information as of January 1, 2017.

Be sure to carefully review your statement. Do you have any questions? This is also a good time to assess your financial plan. Take a moment to explore our suggestions for supplementing your future retirement income.

In the new Statement of Benefits page on our website, you'll find easy-to-use resources:

  • An Interactive sample statement that provides explanations of content and links to other information
  • Frequently asked questions on how to update your name or address, change your beneficiary(ies), calculate a benefit, make additional contributions and more
  • Quick links to forms, online calculators and related webinars

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Effective Rates Applied to Employees' Retirement Accounts

The effective rates of interest have been applied to Wisconsin Retirement System active employees' retirement accounts. To learn how the rates affect you, review your latest Statement of Benefits, which was distributed in April.

Both the effective rates and annuity adjustments, which are based on Core and Variable Trust Funds investment performance, are shown below:

 

Core Fund Variable Fund

Final 2016 Calendar Year Investment Return

8.6%

10.6%

Effective Rate (applied to employees' account balances)

7.9%

10.0%

Annuity Adjustment (applied to retirees' monthly payments)

2.0%

4.0%

What are ETF's projections for rates and adjustments next year? While no one can predict future investment performance, all members — retirees and those still working — should prepare for continued volatility and low returns in the investment markets. For retirees in particular, this may mean flat or even negative Core annuity adjustments.

Projected WRS Core Effective Rates and Annuity Adjustments for 2018
  2017 Core Fund Net Investment Return Projected Core Effective Rate Projected Core Annuity Adjustment
Scenario 1 7.2% 6.6% to 7.0% 0.5% to 0.9%
Scenario 2 0.0% 5.2% to 5.6% 0.0% to -.80%
(a loss)

Note: Keep in mind these are projections. Actual rates will be available after final 2017 investment returns have been determined and an actuarial analysis is completed in January 2018.

For more information

  • Sign up for our webinar, WRS Annuity Adjustments and Effective Rates. This 30-minute webinar reviews the annual rate calculation process and how rates affect your benefits.
  • See Core Fund Annuity Adjustments and Effective Rate Projections, a March 2017 presentation to the governing boards of the WRS. This presentation, updated annually by ETF, reviews a range of projected Core effective rates and annuity adjustments using several Core investment return scenarios.
  • Review this table, which shows the relationship between trust fund investment returns and effective rates and annuity adjustments since 1986.

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Know Your Benefits

Know Your Benefits: Requesting an Estimate

Q: I'm thinking about retiring in the next few years. How do I find out about my future benefit amount?
A: If you are a year or more from retirement, use our online WRS Retirement Benefits Calculator to receive hypothetical projections of your benefit, under both the money purchase and the formula calculation methods. Tip: Have your annual WRS Statement of Benefits handy so you can enter data mirroring your account. If you want to retire within the year, request an official WRS retirement estimate from ETF. We will use your account information to create a customized estimate/application. There are three ways to request an estimate:

  1. Use our secure, online request form
  2. Call ETF toll-free at 1-877-533-5020
  3. Send an email or write to: ETF, P.O. Box 7931, Madison, WI 53707-7931

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WRS Fact: Final Average Earnings and Median Annuity

WRS fact: In line with national trends, Wisconsin's government employees are working longer and putting off retirement. The average retirement age for most WRS members (General and Teachers) is 61 and the median annual annuity is $17,957. This annuity only replaces 33.06% of their final average earnings. Consider this: Will you have enough other income, such as Social Security and personal savings, to support your needs in retirement?

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Teachers Retirement Board Election Results


James Langkamp
Baraboo School District

Wisconsin Retirement System active teacher members elected the following individuals to serve on the Teachers Retirement Board: James Langkamp, teacher in the Baraboo School District, David Wiltgen, teacher in the Eau Claire School District.

About the board: The 13-member Teachers Retirement Board advises the Employee Trust Funds Board on retirement and other benefit matters. Learn more about the board, including membership, meeting dates, roles and responsibilities.

Watch the September edition of WRS News Online for details on the next two Teachers Retirement Board elections. The terms of the following expire in May 2018:

  1. Wisconsin Technical College District Teacher Member: All non-retired WRS teachers employed by a participating Wisconsin Technical College District are eligible to run for this seat on the Teachers Retirement Board. Current member: R. Thomas Pedersen.
  2. Retired Teacher Member: All retired WRS teachers are eligible to run for this seat on the Teachers Retirement Board. Current member: Dennis Murphy.


David Wiltgen
Eau Claire School District

Download nomination materials from our website after September 1. Or write to: ETF, Retirement Board Liaison, P.O. Box 7931, Madison, WI 53707-7931. Send an email to BoardElections@etf.wi.gov.

 

 

 

 

 

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ETF Makes Changes to Improve Customer Service

ETF recently discontinued its walk-in appointment service, due to low demand. Most members are choosing the many different convenient and easy ways to access information about their Wisconsin Retirement System benefits, instead of traveling to our office in Madison.

The change means you must schedule an appointment in order to meet with a WRS benefits specialist. This allows the specialist to complete a detailed review of your account in advance and you will receive personalized, confidential assistance. Bonus: This change has also reduced overall wait times!

However, you can still drop off and pick up forms at our office, located at 801 W. Badger Road in Madison.

Three Types of Appointments
ETF offers three types of face-to-face appointments; all provide opportunities for you to learn about your WRS benefits, receive an explanation of the retirement estimate, annuity options, the application process, and ask questions.

  1. Virtual retirement appointment: This is a convenient and secure, online appointment with a benefits specialist. All you need is a computer, a telephone and an internet connection.
  2. Individual retirement appointment: Schedule an individual appointment to be held at ETF's Madison office.
  3. Group retirement appointment: The group appointment is limited to members who have retirement estimates and are within a year of retirement. Use our interactive state map to find a group appointment in your area.

To schedule an appointment, call us at 1-877-533-5020, Monday-Friday, 7:00 a.m. to 5:00 p.m. (CST), or email.

Call-in Assistance
You may also get assistance from a benefits specialist over the phone. Last year benefits specialists handled 172,092 calls from members who had questions about their WRS retirement, health and other benefits administered by ETF.

Education and Other Resources
You can take advantage of a variety of educational offerings, including evening employee benefits seminars throughout the state, interactive webinars and eLearning. Benefit specialists conducted 171 webinars last year.

ETF's website provides convenient, 24/7 access to WRS benefits information for retireesemployees and othersforms and publications, and online benefits calculators. ETF continuously updates site content and makes navigation improvements, based on members' feedback.

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Members Like Virtual Appointments!

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

  • Do you have questions about your options or the retirement estimate itself?
  • Are you unable to wait for the next available in-person appointment with an ETF benefits specialist?

Then try a virtual retirement appointment. Virtual appointments are secure, private retirement appointments with one of our benefits specialists, conducted online.

Together, you and the specialist talk by telephone and simultaneously review online your retirement estimate, annuity payment options and discuss the retirement process in general. Virtual appointments are convenient (no travel necessary) and easy to schedule. There is no charge for this great new ETF service!

Find out whether a virtual retirement appointment is right for you: Contact ETF at 1-877-533-5020 or send an email inquiry.

Here is what other WRS members have said about their experience with ETF's virtual retirement appointments:

"The specialist was very knowledgeable, shared the information in an organized but flexible manner, and was pleasant and approachable. Efficient use of time - thank you!"

"This is an awesome program. Saved us a trip to Madison and gave full understanding of the retirement process. Thank you!"

"I am very happy that you are offering this service."

"Great option. Very helpful to my retirement decision. The specialist did a great job."

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ETF Webinars for Employees at All Career Phases

Stay informed about your Wisconsin Retirement System benefits and how they work for you! Whether you are a new hire, mid-career or nearing retirement, ETF has a live, interactive webinar applicable to your circumstances. ETF's webinars are conducted by a benefits specialist and focus on a single topic of interest. Webinars over the next several months will cover these important topics:

  • WRS employer and employee contribution rates
  • WRS effective rates and annuity adjustments
  • How to use our online retirement benefits calculator
  • 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

Webinars are free, offered during weekday lunch hours and in the evening, and registration is simple to complete. We also offer many recorded webinars that are available 24/7.

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WRS: Strong Public Workforce

WRS: Strong Public Workforce

Organizations that offer a defined benefit plan, like the WRS, have a significant advantage in attracting and retaining qualified employees, according to human capital and benefits consultant Willis Towers Watson. More than 620,000 individuals participate in the WRS, as either a current state and local government employee, former employee, retiree or beneficiary. Find out why the WRS is strong for Wisconsin.

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Innovative Program Helps You Get Financially Fit

The Department of Employee Trust Funds is pleased to be working in conjunction with the Center for Financial Security at the University of Wisconsin-Madison, the Personal Finance Employee Education Fund, the University of Oxford and the Financial Fitness Group to provide a free, comprehensive financial fitness program to all WRS members.

The 2017 ETF Financial Fitness Program is an innovative, workplace project that centers on improving financial wellness and, along the way, retirement financial security.

As a Financial Fitness Program participant, you will receive tools to help make significant improvements in your financial behavior, including getting and working with a budget, building emergency savings, increasing contributions to your retirement savings plan and learning more about benefit programs available to you.

  • The process begins with the Financial Fitness CHECKUP — a series of questions that reveals your attitudes, knowledge and beliefs about money.
  • CHECKUP results will direct you to the ACADEMY for specific coursework. You can complete this at your own pace. You will receive weekly updates on your progress and can access the educational content for the length of the program.
  • COACH: You can schedule at any time a consultation with a coach for a free 30-day period. You can discuss education on personal financial goals and State of Wisconsin employee benefits.

Get started with the Financial Fitness Program today or visit ETF's website for more information.

Stay connected! Follow ETF on Twitter and use #FinancialLiteracy to learn more about taking control and improving your financial health and wellness.

 

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How Is My Retirement Benefit Calculated?

Contributions paid by you and your employer (plus applicable interest) are found in Section 9 of your Wisconsin Retirement System annual Statement of Benefits.

ETF calculates your benefit projections using both the formula and money purchase methods. Did you know that you can use our online calculator to run your own (unofficial) estimated benefits under both methods? It's best to have your statement in hand while you enter the data into the calculator. And check out our new guide to using the calculator, which will help as you work through the steps.

 

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Webinar: Investing in Collective Trust Funds

Now available: A recorded webinar about investing in collective trust funds, hosted by BlackRock, manager of several indexed collective trust fund options in the Wisconsin Deferred Compensation Program.

In this webinar , Get to Know Your Plan: A Conversation about Mutual Funds and Collective Trust Funds, a BlackRock representative discusses the differences between mutual funds and collective trust funds, including who has access to which funds, costs and/or fees, the regulatory agencies that oversee these funds, how fund information is disclosed to you, and how income is treated. 

View the recorded webinar, Get to Know Your Plan: A Conversation about Mutual Funds and Collective Trust Funds

View the transcript of the original webinar Q&A session

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LAB Completes SWIB Management Audit

The following is taken from an open letter to WRS participants from SWIB Executive Director Michael Williamson, following the release of the Legislative Audit Bureau's management audit of SWIB. For more information about the audit, visit our website.

When you say Wisconsin, what comes to mind? It could be the strong work ethic of the people who live here. Maybe it's the numerous summer festivals that take place across the state. Or maybe it's the pride so many of us share each and every weekend cheering on the Badgers or the Green and Gold. For those of us who have spent our careers serving the people of this state, it might just be that Wisconsin has one of the best-funded public pension systems in the country.

In a time when many public pension funds are struggling with issues related to underfunding, the Wisconsin Retirement System remains among the few that are financially strong. One reason the WRS is so well-funded is the investment management provided by the State of Wisconsin Investment Board. SWIB has developed an investment strategy designed to protect the members of the WRS from another major reduction, keep contributions stable and generate reasonable returns.

A recently released audit report by the Legislative Audit Bureau took an in-depth look at the work SWIB has done in managing the trust funds. Topics discussed in the audit report include SWIB's performance and overall management approach, and steps taken by SWIB to properly diversify the WRS and help keep it well funded. Below are just a few of the key points related to the audit.

  • SWIB has generated positive returns in 8 of the last 10 years.
  • SWIB's 2016 returns were strong and one comparison ranks SWIB in the top quarter of 55 public pension funds for the year.
  • Compared with LAB's peer group, the WRS is the best funded plan and has the second lowest assumed return rate at 7.2%. The average funding ratio of LAB's peer group is 74%. The WRS is nearly 100% funded.
  • SWIB has built a very robust asset allocation. This ensures that returns are still strong when the markets are hot but that the impact of a future downturn is lessened for our retirees.
  • Over the last five years, after accounting for costs, SWIB staff added to the trust funds an additional $1.2 billion above what the markets earned.
  • SWIB staff invests two-thirds of the assets of the WRS for one-fifth of what it would cost to pay external managers for the same work.
  • Internal management of the trust funds has been a financial benefit. A 2015 report from an independent consultant shows that SWIB's total costs were second lowest in its peer group of 15 large pension funds.
  • Because of internal management, SWIB is saving $75 million per year compared to what similar funds would pay to manage the same assets.
  • While SWIB does invest in some investments that can be considered more risky, like hedge funds and derivatives, a consultant's report analyzed the risk/return ratio for 65 pension plans over a 10-year period and ranked the WRS near the top third of a group on a risk-adjusted basis.
  • SWIB's incentive compensation plan is a true pay for performance plan that focuses on long-term results primarily by being heavily weighted toward the five-year returns. Bonuses were awarded in 2015, despite a slightly negative year-end return, because SWIB's five-year return was a solid 6.7%.

The WRS is looked at as a model system by many other pension funds. SWIB is proud of the work it has done to help make the WRS a success and we wanted you to know the facts, not just the opinions that might be floating around.

Last Revised: May 1, 2017
supporting excellence in Wisconsin public service