For Immediate Release
February 23, 2006
Bob Conlin, Director, ETF Communications Office (608) 261-7940
Department of Employee Trust Funds Announces Effective
MADISON, (Wis.) – State and local government employees covered
under the Wisconsin Retirement System (WRS) will receive modest
credits to their retirement account balances this year, Eric Stanchfield,
Secretary of the Department of Employee Trust Funds (ETF), announced
today. The 2005 fixed effective rate is 6.5% and the variable effective
rate is 9%. The rates affect the 262,000 state and local government
workers covered under the system, including teachers and University
of Wisconsin employees.
The effective rates are not the annual dividends and adjustments
applied to WRS retiree pension payments. The Department expects
to release that information in the coming weeks.
ETF calculated the effective rates based on finalized State of
Wisconsin Investment Board (SWIB) investment results for 2005, which
were 8.6% for the Fixed Trust Fund and 8.3% for the Variable Trust
Said Stanchfield, “In this climate of moderate market returns,
these are very good results. SWIB’s disciplined, long-term
approach to investing the WRS trust funds continues to maintain
and preserve the financial stability of the WRS and has helped us
recover from the very difficult market environment of the years
This is the third consecutive year of positive returns for the
Fixed Fund. Stanchfield noted that because Fixed Trust Fund investment
gains and losses are distributed over a five-year period, this year’s
effective rate calculation reflects losses carried forward from
the bear markets of 2001 and 2002. “There is no question that
we have weathered a storm and are now entering a relatively stable
investment climate,” said Stanchfield. “But due to prudent
funding policies, the WRS continues to be in excellent financial
condition. That is good news for all of our members.”
Additional background information:
- The ten- and five-year (compounded) average annual Fixed Trust
Fund effective rates are 10.81% and 7.15%, respectively.
- The ten- and five-year (compounded) average annual Variable
Trust Fund effective rates are 9.04% and 2.77%, respectively.
- 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. Those who have elected this option
can experience significant gains, but they also risk significant
losses from unfavorable stock market performance. About 28% of
the 262,771 WRS active employees participate in the Variable Fund.