Department of Employee Trust Funds
(Revised) January 11, 2013
Effective Rates and
Annuity Adjustments for 2013
At this time of the year, many Wisconsin Retirement System (WRS)
members want to know what to expect for next year’s effective
rates (applies to active employees) and annuity adjustments (applies
to retirees) for the Core and Variable Trust Funds.
The projections shown below are based on the State of Wisconsin
Investment Board’s (SWIB) preliminary investment returns as
of November 30, 2012. Please note: Year-end finalized investment
returns through December 31, mortality and other actuarial factors
will affect the final rate setting process.
SWIB Investment Return
| Projected Effective
(for active employees)
|1.8% to 2.2%
||13% to 15 %
| Projected Annuity
|0% to -13%
||7% to 9%
Core Fund gains or losses for each year are “smoothed”
(recognized) in equal increments over five years to cushion the
effect of market volatility. Members in the optional Variable Fund
experience the full effect of market gains or losses—returns
are not smoothed.
The Core Fund annuity adjustment calculations for 2013 will be
based on the investment experience from 2008 to 2012. A member’s
Core annuity can never go below the original amount (“floor”)
received at retirement.
Under the system’s five-year smoothing process, 2013 is the
last year in which the annuity adjustment rates will reflect the
investment decline caused by the stock market crash of 2008.
Watch for these upcoming important announcements:
- Preliminary calendar year-end investment returns in mid-to-late
- Final effective rates in February,
- Final annuity adjustments in March,
- Individual annuity adjustments for retirees are reported in
their annual annuity mailer in April (annuity adjustments will
be reflected on the May 1 payment).
The unique risk-sharing feature of the WRS provides a stable and
guaranteed income in retirement, despite market conditions. The
WRS is in sound financial condition and positioned to pay all of
its benefit promises—both now and in the future.