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News

Press Release

For Immediate Release
February 8, 2008

Contact:

Matt Stohr
ETF Communications Office Director
(608) 266-3641


Department Announces Core and
Variable Effective Rates


MADISON, Wis. – David Stella, Secretary of the Department of Employee Trust Funds (ETF), announced the effective interest rates credited to the retirement accounts of employed Wisconsin Retirement System (WRS) members and eligible inactive members. For 2007 the Core Trust Fund effective rate is 13.1% and the Variable Trust Fund effective rate is 6%.

The rates affect the account balances of more than 262,000 active state and local government workers, including law enforcement officers, teachers, firefighters, and University of Wisconsin employees and approximately 60,000 inactive members.

The Department also uses the effective rates as a starting point to calculate the annual monthly benefit (dividend) increases and variable adjustments paid to WRS retirees. ETF expects to make this announcement in the coming weeks, once those calculations have been completed by its consulting actuary.

The rates, calculated by ETF, are based on investment returns earned by the State of Wisconsin Investment Board (SWIB).

“Despite the downturn in overall market performance at the end of 2007, SWIB did an excellent job of diversifying investments to optimize market returns,” Stella said. “Diversification will be an important tool for controlling risk in this time of challenging market conditions.”

Additional background information:

  • The ten- and five-year (compounded) average annual Core Trust Fund effective rates are 10.6% and 9.0%, respectively.
  • The ten-and five-year (compounded) average annual Variable Trust Fund effective rates are 7.3% and 15.4%, respectively.
  • The Core Fund (or balanced fund) is the larger of the two WRS trust funds. It is a balanced fund of 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 25% of the 262,000 WRS active employees participate in the Variable Fund.
  • Inactive participants are those who have left public service but still keep their retirement accounts open. About 45% of inactive members qualify for Core Fund effective rate interest crediting. The rest, by law, receive a 5% increase.
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