Department of Employee Trust Funds
January 22, 2019
ETF Projections for Annuity Adjustments
Based on preliminary 2018 investment performance for the Core Trust Fund, ETF is anticipating either no change or a -0.5% adjustment (a decrease) to Wisconsin Retirement System retirees' Core benefit payments beginning May 1. In addition, those participating in the Variable Trust Fund will likely see a 10%-14% reduction in the Variable portion of their monthly benefit payments.
Preliminary 2018 Core and Variable Trust Fund investment results, announced by the State of Wisconsin Investment Board, are as follows (figures are gross of fees):
- Core Trust Fund: -3.3%
- Variable Trust Fund: -7.9%
ETF will announce the actual effective rates (applied to employee accounts) and annuity adjustments (affecting retiree annuities) in March, after Core and Variable Fund investment returns have been finalized and an actuarial analysis conducted.
When will retirees be informed about adjustments to monthly payments?
At the end of April ETF will mail retirees a personalized statement showing changes to their monthly payments for the coming 12 months, beginning May 1.
By law, WRS retirees’ annual benefit adjustments depend on investment performance – the WRS does not guarantee an annual cost of living adjustment. Instead, annuity adjustments (increases as well as decreases) are based on the investment returns of the Core and Variable Funds.
Core annuities cannot be reduced below the original amount set at retirement (“Core Floor”). Only previously-granted adjustments (dividends) can be reduced. There is no such protection (or “floor”) for Variable participants. A prolonged period of poor investment performance could result in the Variable portion of a retiree’s annuity being reduced below the original amount.