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Press Release

For Immediate Release
March 6, 2006


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

ETF Announces Pension Adjustments

MADISON, (Wis.) – Trust fund earnings in 2005 were enough to give retired state and local government employees in the Wisconsin Retirement System (WRS) a small increase in their monthly pension checks, Eric Stanchfield, Secretary of the Department of Employee Trust Funds (ETF), announced today. The fixed annuity dividend is 0.8% (eight-tenths of one percent) and the variable adjustment is 3%. Retirees will receive the increases beginning with their May 1 pension payments.

“These are modest adjustments, but nonetheless we are very pleased to provide our retirees with an increase this year,” said Stanchfield, adding that the WRS does not provide for an annual cost-of-living increase, or any other guaranteed annual increase.

Whether any post-retirement pension increase is provided depends on returns from the pension funds’ investment earnings. Fixed Fund gains and losses are distributed over a five-year period to help avoid wide fluctuations between pension increases or decreases. This year’s Fixed annuity dividend reflects losses carried over from 2001 and 2002. In addition, payment of annuity increases may only occur after current and future projected funding needs of the pension system are met. In practical terms, this means that only the portion of investment returns exceeding 5% annually are available for pension increases.

Stanchfield complimented the work of the State of Wisconsin Investment Board (SWIB), the agency that manages the WRS trust funds. “In this climate of relatively moderate market returns, the SWIB staff did an excellent job on behalf of our members, exceeding many of the investment benchmarks set by its board of trustees.”

There are approximately 131,000 WRS retirees, all of whom receive their monthly payments in the form of a fixed annuity. Some 31,000 of them also participate in the optional variable trust fund, which is invested primarily in common stocks. The variable portion of their annuities fully reflects the gains and losses of the variable trust fund.

Additional Background Information:

  • In 2005, the Department paid out nearly $3.0 billion in retirement benefits to 131,000 retired state and local government employees, more than 90% of whom still live in Wisconsin.
  • The ten-year (compounded) average annual fixed annuity dividend is 5.14%; the five-year (compounded) average is 1.61%.
  • The ten-year (compounded) average annual variable annuity adjustment is 3.45%; the five-year (compounded) average is –2.86%.

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