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Press Release

For Immediate Release
February 23, 2006


Bob Conlin, Director, ETF Communications Office (608) 261-7940

Department of Employee Trust Funds Announces Effective Rates

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 Fund.

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 2000-2002.”

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.

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