For Immediate Release
February 8, 2008
ETF Communications Office Director
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
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
- 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.