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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