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Department of Employee Trust Funds
January 25, 2013

SWIB Announces 2012 Investment Returns;
ETF Provides Rate Projections

Did you know the State of Wisconsin Investment Board (SWIB), the agency that invests Wisconsin Retirement System (WRS) assets, recently announced preliminary investment returns for calendar year 2012? The Core Fund ended the year with a preliminary return of 13.6% and the Variable Fund returned a preliminary 16.9%. Both funds surpassed their one-year benchmarks.

When preliminary investment returns are finalized at the end of this month, the Department of Employee Trust Funds (ETF) will subsequently calculate the effective rates and annuity adjustments. Watch for our effective rate announcement in late February and our annuity adjustment news in March.

At this time, however, we can provide the following rate projections based on the preliminary investment returns:

Core Fund Variable Fund
Preliminary 2012
SWIB Investment Return
13.6% 16.9%
Projected Effective Rate*
(for active employees)
2.1% to 2.5% 15% to 17 %
Projected Annuity Adjustment**
(for retirees)
0% to -13% (decrease) 9% to 11%

*Applied to employees' account balances.
**Applied to retirees' monthly payments.

ETF anticipates that half of all WRS retirees (approximately 85,000 individuals) will receive at least some negative adjustment to their Core annuities. The Core and Variable annuity adjustments are effective May 1, 2013.

Why won’t the projected negative Core annuity adjustment affect all WRS retirees equally? By law, Core annuities cannot be reduced to an amount below the original, guaranteed amount (the “floor”) set at retirement. Some retirees will receive a reduction at the lower end of the range (or none at all) because their Core annuities are already either near, or at the guaranteed Core floor set at retirement, respectively. Others will experience a Core annuity reduction at the higher end of the range because their Core annuities have grown that much over time with dividends.

In general, members who retired before 2004 will receive up to a 13% reduction, if they have any past increases to repeal, and members who retired after 2004 will not receive a reduction because they are already at their Core floor.

This is the last year in which the Core effective rate and Core annuity adjustment reflect 2008 investment declines. The Core Fund has earned positive returns in the past four years. Therefore, we anticipate Core annuity increases in 2014, barring another substantial downturn.

For more information, please visit the many resources found on the Core/Variable menu of our website.

Additional ETF resources:

When Will ETF Announce Rates and Adjustments?

Information for Retirees Regarding 2013 Annuity Adjustments

What’s My Minimum Core Annuity (“Core Floor”) Amount?


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