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WRS News Online Vol. 4, No. 4 - November 2018

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Financial Fitness Program: Stay Strong, Finish Well!

The Financial Fitness Program finish line is fast approaching, so don’t let this opportunity pass you in the homestretch! ETF’s free Financial Fitness Program, available to all WRS members, offers exclusive education and planning tools.

It’s easy to get in the race:

  • Take the Financial Fitness Checkup, a 10-minute, confidential and secure online survey that helps you discover your strengths and weaknesses when it comes to personal finance, saving and investing, and retirement planning.

  • Complete the check up to access:

    • free tutorials, calculators and tools in the online Financial Fitness Academy™

    • free sessions with financial fitness coaches to help you understand your financial situation and help set goals, create a plan, and much more! (Free offer good for 30 days from initial consult.)

Tell me about those tutorials!
There are dozens of topics and resources to access in the ACADEMY™ – here’s a short list of the highlights:

  • Introduction to Retirement Planning

  • Principles of Financial Planning

  • Personal Finance Basics

  • Save Money on Taxes While Saving for Retirement

  • Automatic Savings and Investment Plans

  • Financial Planning Made Simple

Get started on your financial wellness improvement journey today. Time is running out on this incredible offer – don’t let it pass you by!

Sponsors and Partners
The Financial Fitness Program is offered by the Department of Employee Trust Funds in coordination with the Wisconsin Retired Educators Association, Professional Firefighters of Wisconsin, and state and local government employers. Our project partners include:

  • Financial Fitness Group

  • Ameriprise Financial

  • Wisconsin Department of Financial Institutions

  • Center for Financial Security at the University of Wisconsin-Madison

  • Personal Finance Employee Fund

  • University of Oxford

For More Information

Financial Fitness Program FAQs and more

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Board Nomination Deadlines Extended

Deadlines for filing nomination papers for separate Teachers Retirement Board elections among Wisconsin Retirement System active teachers have been extended. There are now four seats available in two separate races to place the following members on the board:

  • Active Teacher (employed by the Milwaukee Public School District only)

  • Active Teacher (all school districts except Milwaukee Public School District)

TR Board – Milwaukee Public School Teacher Member (1 seat available)
Any active WRS covered teacher employed by the Milwaukee Public School District is eligible to run for this seat on this Board. Current member: Vacant. After the election is certified, the new board member will serve the remainder of the current five-year seat, which expires May 1, 2020. Download a nomination packet for this election. The deadline to return nomination materials is December 21, 2018.

TR Board – Teacher Member (3 seats available)
Any active WRS covered teacher (excluding those employed by the Milwaukee Public School District) is eligible to run for three seats on this Board. Due to the recent resignation of a public school teacher member, the call for nominations has been extended. Two of the available seats are for five-year terms that begin on May 1, 2019. The teacher filling the third seat will serve the remainder of the resigning board member’s term, which will expire May 1, 2021. The deadline to return nomination materials is November 30, 2018. If you already submitted nomination materials, please do not resubmit. Download a nomination packet for this election.

Important information about the nomination process:

  • Download the nomination packet you want using the links above or email your request to BoardElections@etf.wi.gov. You may also write to: ETF, Retirement Board Liaison, P.O. Box 7931, Madison, WI 53707-7931. Note: To ensure you receive the correct nomination packet, please specify which one you want .

For information on the WRS governing boards, including current board rosters, board member responsibilities, meeting schedules and agendas, visit our Governing Board webpages.

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SWIB Announces Executive Staff Hires


David Villa

 


Rochelle Klaskin

The Board of Trustees of the State of Wisconsin Investment Board appointed David Villa as executive director/chief investment officer. Trustees have also appointed Rochelle Klaskin, who has been serving as interim executive director, as deputy executive director/chief administrative officer.

Villa has led SWIB’s innovative investment strategy since 2006. He has been a driving force in the strong returns and low-cost management of the $109.5 billion Wisconsin Retirement System. Villa is recognized around the globe as an innovative and effective leader. Most recently he was awarded Institutional Investors’ 2018 Allocator Lifetime Achievement Award and is also a high-ranking member of Chief Investment Officer Magazine’s Power 100 list.

Klaskin joined SWIB in 2015 as chief legal counsel. She has 20 years' experience in advising and leading businesses and service organizations through daily operations, transactions, restructuring, and strategic planning.

Trustees determined that combining the roles of executive director and CIO would best fit SWIB’s increasingly sophisticated investment organization and the infrastructure that supports it. Large public pension plans in Florida, New York, and Massachusetts are also led by an executive director/CIO. SWIB’s governance model provides robust trustee oversight for the organization.

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Contribution Rates to Decrease in 2019

Wisconsin Retirement System contribution rates will decrease slightly for all employees in 2019. How will this affect your paycheck? The table below shows how much you and your employer now pay into the system (expressed as a percentage of pay) and how that will change in 2019. Contribution rate changes, whether increases or decreases, are considered normal for retirement systems that pre-fund retirement benefits. The 2019 rate changes are primarily due to higher favorable WRS Trust Fund investment performance.

WRS Required Contribution Rates

Employee Category

Total Rate
2018

Total
Rate
2019

Employee Share of Total Rate
2019

Employer Share of Total Rate
2019

 % Change
from Total Rate
for 2018

General,
Executive and Elected Officials

13.4%

13.1%

6.55%

6.55%

Decrease 0.3%

Protective with Social Security

17.4%

17.1%

6.55%

10.55%

Decrease 0.3%

Protective without Social Security

21.6%

21.5%

6.55%

14.95%

Decrease 0.1%

Note: Rates for other mandatory employer-paid contributions for duty disability, the state's Accumulated Sick Leave Conversion Credit Program, or unfunded liabilities are not included in the above figures, as they vary by employer.

How do contributions affect my benefits?
Your WRS benefits are funded by employer contributions, employee contributions and the interest they earn from being invested by the State of Wisconsin Investment Board. In general, when investment earnings are greater than expected, the rates paid by you and your employer may decrease the following year. However, when earnings are lower than expected, rates may increase to make up for the shortfall. The total rates are generally split evenly between employees and employers, and contributions are paid in full — ensuring full funding of future WRS benefits.

The rates are reviewed and change annually, upon review of the ETF Board’s consulting actuary’s valuation of the system and WRS funding requirements.

The 2019 rate changes are primarily due to higher favorable WRS Trust Fund investment performance.

For More Information

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Make Time for End-of-Year Considerations

If you’re considering making any of the following decisions related to your Wisconsin Retirement System benefits, please be aware of important deadlines associated with each of these processes:

  • Making additional contributions to your WRS account

  • Withdrawing a health insurance application/change submitted during the It's Your Choice open enrollment period

  • Purchasing service

  • Electing or canceling Variable Trust Fund participation

Making Additional Contributions
Deadline: December 28, 2018

Did you know that you can make after-tax additional contributions to your WRS account to supplement your benefit? Contributions receive annual Core and Variable (if applicable) effective rates of interest and you can pay either through payroll deduction or send a payment to ETF. See our web page showing Core Fund and Variable Fund returns, rates and adjustments since 1984.

Additional contributions can be made at any time while you are actively employed by a WRS employer, but December 28, 2018 is the deadline if you want your contribution to begin accruing interest on January 1, 2019. Additional contributions received after December 28, 2018, will not begin to accrue interest until January 1, 2020.

Withdrawing a Health Insurance Application/Change
Deadline: December 28, 2018

If you want to withdraw your recently-submitted health insurance application/change submitted during the It's Your Choice open enrollment period, you must notify your employer's benefits/payroll office in writing by December 28, 2018.

Purchasing Service
Payment Deadline: January 2, 2019

If you are eligible to purchase creditable service, it may be to your advantage to do so. Here's why:

  • you will receive a higher benefit if your annuity is calculated as a formula benefit; and

  • there will be a higher special death benefit for your beneficiaries if you die as an active employee

The best time to purchase creditable service varies, based on individual circumstances. In order to make the service purchase, your application and payment must be received prior to WRS employment termination. If you want to buy service based on 2018 calendar year earnings at the current cost, your application and payment must be received by January 2, 2019. Note: If your earnings are based on fiscal year earnings, changes in contribution rates will affect how much you pay.

Contribution rates change each year; review the 2018 and 2019 rates for your WRS employment category here.

Variable Trust Fund Elections and Cancellations
Deadline: January 2, 2019 (elections and cancellations) or December 28, 2018 (requests to rescind a cancellation)

If you wish to either elect to participate in the Variable Fund or cancel your Variable Fund participation with an effective date of January 1, 2019, ETF must receive your election/cancellation prior to the close of business on January 2, 2019. Exception: A cancellation form received by ETF via fax or as an e-mail attachment after 4:30 pm on January 2 but before 12 a.m. on January 3 is still considered received on January 2. These dates are not postmark dates.

Q. Why the January 2 deadline for Variable Fund cancellations?

A. The cancellation is normally the last day of the year. However, when a deadline falls on a weekend or holiday, it is extended to the first working day after the deadline, per Wis. Stat. §990.001(4).

For More Information

Review our brochures:
Buying Creditable Service (ET-4121)
Additional Contributions (ET-2123)
How Participation in the Variable Trust Fund Affects Your WRS Benefits (ET-4930)

Sign up for our live, interactive webinars and ask questions:

You can also watch recorded webinars on these topics.

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ETF Seeks Member Opinions via Annual Survey

If you receive a survey from ETF asking for your feedback on how to improve our services, please respond!

ETF recently emailed a satisfaction survey to a random group of 110,000 active employees and retirees. Survey results will be used to ensure we are meeting all members' needs and expectations.Your opinions are important!

If you have questions regarding the survey, please contact ETF. Thank you for your time and participation in this important survey.

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A Look at WRS 2017 Financials

2017 CaFR Cover

ETF has released the Comprehensive Annual Financial Report of the Wisconsin Department of Employee Trust Funds for the year ended December 31, 2017. This report provides comprehensive information about ETF, the Wisconsin Retirement System, and other benefit programs administered by ETF. The WRS paid over $5.2 billion in benefits in 2017. The WRS funding ratio calculated in accordance with accounting standards was 103% as of December 31, 2017. Sound funding and plan design principles continue to keep the WRS financially strong.

Complete WRS financial statements, with notes and supplementary information, can be found in ETF’s 2017 Comprehensive Annual Financial Report.

WRS Assets and Reserves
As of the end of 2017, the WRS had net assets of more than $104 billion, an increase of $11.6 billion from 2016. These assets are invested in a balanced portfolio of equities, fixed income and other investments managed by the State of Wisconsin Investment Board.

$59.6 billion of reserves are set aside to pay monthly benefits to over 203,000 retirees and beneficiaries; the average annual benefit is $25,181. The annuity reserve, increased by 5% annual interest, is sufficient to pay lifetime benefits without any additional contributions.

2017 CaFR Cover

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 400,000 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. Investment income that exceeds or is less than the assumed investment return of 7.2% is spread over five years. As of December 31, 2017, the WRS has $3.2 billion in past investment gains that will be used to supplement current income or offset investment losses over the next four years.

WRS Revenues and Expenses
Investment income is the largest source of revenue for the WRS. Investment income accounts for approximately 74% of the WRS revenues over the past 10 years.

Employer contributions are paid by WRS employers and are held in the employer reserve until transferred 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 $5.3 billion to combined employee and employer contributions of $2.0 billion, the importance of a strong investment program to make up the difference is clear.

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Harvard Analysis Looks Favorably on WRS

A recent Harvard University report on a stress test analysis of the largest public pension plans in 10 states had many good things to say about the Wisconsin Retirement System. The report warns that some plans that are poorly funded could struggle with many problems, including high costs and possibly insolvency, while others that are well-funded are characterized by a combination of fiscal discipline and adherence to policies designed to mitigate market downturns. Wisconsin is cited as an example of how “strong funding policies can help to ensure that public pension systems are sustainable and secure.” For pension plans, stress tests typically measure the effects of various scenarios on the plan, including investment volatility and actuarial factors such as hires into the system, terminations, retirements, mortality, etc.

For recent media coverage of the analysis and report, see Bloomberg: Wisconsin’s Pension System Works for Everyone

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When the Weather Outside is Frightful...Book an Online Appointment

Unable to meet with one of our trust funds specialists in-person? Try an online retirement appointment – you get the same great personal service and attention to detail! All you need for an online appointment is a computer or laptop, internet connectivity, and a telephone. Together, you and the specialist review your retirement paperwork and address all your questions. Contact us to learn more!

 

 

 

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Upcoming Board Meetings

The next Group Insurance Board meeting is set for November 14. The ETF Board, Teachers Retirement Board, and Wisconsin Retirement Board will next meet on Thursday, December 13. Find the board meeting agendas here.

SWIB

The SWIB Board of Trustees will next meet on December 11-12 at SWIB's office building at 121 E. Wilson Street, Madison. Find the board meeting agendas and materials here.

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Last Revised: November 12, 2018
supporting excellence in Wisconsin public service