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News

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 System.

Click 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. It doesn’t.

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.


Sincerely,

David A. Stella
Secretary,
Wisconsin Department of Employee Trust Funds

 

supporting excellence in Wisconsin public service