WRS News Online

Contribution Rates to Decrease in 2016

Wisconsin Retirement System required contribution rates for employers and employees will decrease slightly again next year, primarily due to trust fund investment gains. The table below shows contribution rates effective January 1, 2016, as reviewed and approved by the Department of Employee Trust Funds Board in June.

WRS Required Contribution Rates

Employee Category

Total Rate
2015

Total
Rate
2016

Employee
Contribution
for 2016

Employer
Contribution
for 2016

General

13.6%

13.2%

6.6%

6.6%

Elected Official/
Executive/Judge*

15.4%

13.2%*

6.6%*

6.6%*

Protective with Social Security

16.3%

16.0%

6.6%

9.4%

Protective without Social Security

19.9%

19.8%

6.6%

13.2%

*The state’s 2015-2017 biennial budget authorized the ETF Board to combine the General and the Elected Official/Executive/Judge Categories for purposes of establishing annual employer and employee contribution rates to the WRS. Read more.

Q: How do contribution rates affect me and why do the rates change every year?
A: The underlying financial principal of the WRS provides that funds generated from required employer contributions, required employee contributions and investment earnings together must be sufficient to meet the present and long-term retirement benefit commitments of the system. How much you and your employer pay – expressed as a percentage of salary in the table above – changes annually, based on the funding requirements of the WRS. Keep in mind these important points:

  • Your WRS retirement benefit is pre-funded. Contributions and investment earnings are deposited into your account during your working years.
  • The Board’s consulting actuary examines WRS funding requirements annually in order to ensure the system can meet its obligations.
  • In general, when investment earnings are greater than expected, the actuary may recommend lowering both employer and employee contribution rates the following year. When earnings are lower than expected, the same rates may have to be increased to make up for the shortfall.
  • Changes in employer and employee contribution rates have been very stable over the years because investment returns are smoothed over a five-year period. Smoothing works to control year-to-year volatility in the stock market.

Did you know?

  • For most public employee pension plans, investment earnings provide the most significant portion of the plan’s funding.
  • Nationwide, investment earnings contribute about 62% on average, according to the National Association of Retirement Administrators.
  • For the WRS, investment income on the trust funds contributes approximately 76% of the system’s funding requirements.
  • Due to its plan design, funding principles, and adherence to paying contributions when due (not deferred to the future), the WRS is one of the best funded public pension plans in the country.

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