Department of Employee Trust Funds
March 11, 2011
ETF Responds to New York Times
On March 11, 2011 the New York Times published an article that
contained numerous factual errors regarding the Wisconsin Retirement
here to view the New York Times article.
Our response is below:
“The Burden of Pensions on States” article in the March
11, 2011 edition of the New York Times contained a number of inaccuracies
about the Wisconsin Retirement System. The study prepared for the
Department of Employee Trust Funds (the state agency that administers
the Wisconsin Retirement System) was not expected to show, and did
not show, that it has been relying on an unrealistic assumed rate
of investment return. In fact, the retirement system has exceeded
its investment expectations since its inception in 1982. If the
New York Times would have reviewed the study before publishing the
article, it would have noticed that the study is a forward looking
analysis that is projected to be cost-neutral for employers and
employees in the system.
The story also overstates current contribution rates and suggests
that the State of Wisconsin provides health insurance for all retirees.
The modest increases in contribution rates required in the next
few years to fund the system are not due to faulty assumptions by
the retirement system but rather due to investment losses caused
by the financial collapse of Wall Street in 2008. Pension contributions
in Wisconsin routinely fluctuate slightly up and down depending
on actual investment returns and actual demographic experience.
In fact, contribution rates actually declined in 2009 and currently
the rate is consistent with the rate in 1996.
I look forward to reviewing Mr. Schieber’s analysis of Wisconsin’s
“eighth-richest” pension benefits when it is available
for public review. I hope his analysis doesn’t ignore these
important facts: most retirees in the system have seen their pensions
reduced 4.6% in the last three years and some retirees have experienced
a 40% decrease in the last three years due to the global economic
crisis in 2008.
David A. Stella
Wisconsin Department of Employee Trust Funds