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News

Press Release

For Immediate Release
June 18, 2004

Contact: Pam Henning, (608) 267-2929


Employee Trust Funds Board Sets 2005
Wisconsin Retirement System Contribution Rates

MADISON -- Eric Stanchfield, Secretary of the Wisconsin Department of Employee Trust Funds (ETF), announced that required contribution rates to fund Wisconsin Retirement System (WRS) benefits will increase for all employee groups in 2005. Rates for protective category employees not covered by Social Security will increase by .2% of payroll; rates for both the general/teacher and executive/elected categories of employees will increase by .4%; and rates for protective category employees covered by Social Security will increase by .8%.

The rate increases are based on the recommendation of the ETF Board's consulting actuary and will go into effect for salaries and wages beginning January 1, 2005.

Stanchfield cites the effects of three years of declining investment markets and assumption changes from a recent actuarial study as reasons for the contribution rate increases. "Although the investment markets experienced a significant rebound in the past year, we are still recognizing Trust Fund investment losses from 2000 through 2002," he said. "We anticipated rate increases. However, these are somewhat lower because of strong investment performance in 2003."

Stanchfield said he anticipates continued upward pressure on contribution rates for the next several years, in order for the system to meet its long-term funding requirements.

Normal Cost contribution rates as a percentage of salary* by WRS employment category for 2005 are summarized as follows:


Employee Category 2004 2005 Percent of
Payroll Increase
General/Teacher 9.8% 10.2% .4%
Elected Officials/Executives 10.7% 11.1% .4%
Protectives with Social Security 12.1% 12.9% .8%
Protectives without Social Security 13.8% 14.0% .2%
* Rates shown do not include other mandatory employer contributions for duty disabilities, the state's Accumulated Sick Leave Conversion Credit program, or unfunded liabilities - all of which vary by employer.

Additional information:

  • By law, the WRS receives funding from three separate sources: employee contributions, employer contributions, and investment earnings. Together, these must be sufficient to meet the present and future pension and benefit commitments of the system.


  • Every June the ETF Board approves the rate at which employers and employees contribute to the WRS for the following year. The Board's decision is based on recommendations made by a consulting actuary. Rate changes, whether higher or lower, are considered normal for retirement systems such as the WRS that pre-fund retirement benefits.


  • Contribution rates do not affect formula retirement annuity benefits under the WRS.


  • General category employees comprise approximately 91% of the total WRS covered employee population. The group includes state and local government employees, excluding Milwaukee County and City of Milwaukee employees.


 

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