Department of Employee Trust Funds - Hot Topic
December 17, 2002
ETF Board Sets Negative Fixed Dividend Threshold
As a result of several consecutive years of poor investment performance,
it is likely that no, or negative, fixed annuity dividends for retirees
could occur. As a result, the Employee Trust Funds (ETF) Board has
decided how to deal with this situation. At its December 13 meeting,
the Board decided that a negative fixed annuity dividend would be
applied to April 1 2003 payments only if the loss is greater than
.5%. If the loss is less than .5%, it will be carried over to next
year's dividend calculations. This equates to 50 cents for
every $100 of annuity.
Annuitants: Please remember the fixed portion of your benefit is
guaranteed by law to never drop below your final computed
amount - only past dividends can be taken back.
Under state law, the ETF Board grants positive annuity dividends
if it would result in at least a 2% increase for all annuities.
The law also allows the Board, if there is a deficit in the fixed
annuity reserve, to revoke past annuity dividends. This has never
happened in Wisconsin Retirement System (WRS) history, but it is
possible. Over the past year, the Department has been informing
annuitant groups and WRS participants that, depending on market
experience, there may be no dividends or negative dividends in some
State of Wisconsin Investment Board (SWIB) investment returns as
of December 31, 2002, will determine the 2003 effective rates (interest
on active and eligible inactive accounts) and annuity dividends
set by the ETF Board. For more information on calendar year-to-date
investment returns, SWIB assets under management and investment
policies, etc., visit the SWIB Internet site, www.swib.state.wi.us.
The actual annuity dividend amounts for 2003 should be calculated
and available by late February. Watch the "Hot Topics"
section of our Internet site.