For Immediate Release
February 4, 2005
Contact: Nancy Ketterhagen, Publications Editor (608) 266-7471
Department of Employee Trust Funds
Announces Effective Rates
MADISON, Wis. -- Eric Stanchfield, Secretary of the Department of Employee Trust Funds (ETF), announced the effective interest rates credited to the retirement accounts of working Wisconsin Retirement System (WRS) members and eligible inactive members.
For 2004, the fixed effective rate is 8.5% and the variable effective rate is 12%. The rates affect the accounts of more than 264,000 actively employed state and local employees, including teachers and University of Wisconsin employees.
These rates are not the annual annuity dividends and adjustments; ETF expects to release that information, which will affect the monthly annuities of approximately 125,000 WRS retirees, by the end of February.
ETF calculated the effective rates based on State of Wisconsin Investment Board (SWIB) returns for 2004, which were 12.8% for the Fixed Trust Fund and 12.7% for the Variable Trust Fund.
"SWIB has had another excellent year of performance with solid investment returns," said Secretary Stanchfield. "We hope this positive trend will continue, especially after experiencing the downturn in investment markets from 2000 through 2002." Stanchfield said SWIB "made excellent decisions in its asset allocation process and its portfolio management. I congratulate the staff on a job well done."
Additional background information:
- The five-year (compounded) average annual Fixed Trust Fund effective rate is 8.0%.
- The ten-year (compounded) average annual Fixed Trust Fund effective rate is 11.3%.
- The five-year (compounded) average annual Variable Trust Fund effective rate
- The ten-year (compounded) average annual Variable Trust Fund effective rate is 10.7%.
- The Fixed Fund (or balanced fund) is the larger of the two trust funds of the WRS. It has diversified holdings in domestic and international stocks, bonds, loans, real estate and private equity.
- The Variable Fund was created as an option for members to have a portion of their benefit based on the performance of a broadly diversified stock portfolio, with annuities that fully reflect the gains and losses of investments in the portfolio. Those who have elected this option can experience significant gains, but they also risk significant losses from unfavorable stock market performance.