The Employee Trust Funds Board has approved 2023 required contribution rates for the Wisconsin Retirement System, following the recommendations of its consulting actuary. Contribution rates will increase for all WRS employee categories, due to the effects of a recent reduction in the WRS assumed rate of investment return and are listed below. Last December the Board, acting on the advice of its actuary, reduced the assumed rate of return because of economic forecasts.
The Board took these actions – lowering the investment assumption return and slightly raising 2023 contribution rates – to support its policy to be 100% funded.
In keeping with the WRS shared risk design, however, the total impact of the actuarial reduction on 2023 contribution rates was partially offset by recent investment gains, particularly last year’s 16.89% Core Trust Fund return. The 2023 contribution rate increases are as follows:
- General, Executive & Elected: 0.6%
- Protective with Social Security: 1.5%
- Protective without Social Security: 2.0%
Contribution rates, expressed as a percentage of salary, are listed for each WRS employee category in the following table. Contributions from employees and employers and investment earnings fund WRS benefits. The new rates take effect January 1, 2023.
|Employee Category||General, Executive and Elected Officials||Protective with Social Security||Protective without Social Security|
Note: Rates for other mandatory employer-paid contributions (e.g., duty disability, the state's Accumulated Sick Leave Conversion Credit Program) or unfunded liabilities are not included in the above figures because these rates vary by employer.
The total required contribution cost is generally split evenly between employees and employers for general category employees and may depend on collective bargaining agreements for some protective occupation employees.
WRS contribution rates change annually, based on investment performance of the WRS Trust Funds and actuarial factors to pre-fund retirement benefits. In general, when investment earnings are greater than expected, contribution rates may decrease the following year. When returns are lower than expected, this puts pressure on raising rates in order to make up for the shortfall.
- The WRS has long been considered one of the best-funded public pension systems in the country. As of December 31, 2021, the WRS is 100% funded.
- Funds to pay WRS pension benefits are generated from three sources: investment earnings, employer contributions and employee contributions. Investment earnings comprise 80% of resources needed to fund benefits.
- The WRS is a low-cost system. Wisconsin and local governments spend 2.1% of their budgets on the WRS, compared to 5.0% nationally*. No general taxes are required to support the WRS. *Note: Percentages include the City of Milwaukee and Milwaukee County.
- ETF Board June 23, 2022 Meeting Agenda and Materials
- WRS Contribution Rates Since 1989
- WRS Returns, Rates and Adjustments