The Employee Trust Funds Board recently considered and updated key economic and demographic assumptions that are used to value the liabilities of the Wisconsin Retirement System. This included reducing the current assumed rate of investment return from 7.0% to 6.8%.

The 6.8% assumed rate of investment return will be effective for the 2021 WRS valuation and will be used to help determine employer and employee contribution rates for 2023.

The board’s decision was based on the Wisconsin Retirement System Three-Year Experience Study January 1, 2018 – December 31, 2020, completed by its independent actuary, which included a recommended range of assumed rates for the board to consider. State law requires an experience study be conducted at least every three years.

While the ultimate cost of the pension plan is determined by actual experience, the assumptions are used to set rates to ensure adequate funding for current and future benefit payments. 

Nationally, investment return assumptions are declining.  More than half of the 131 major public pension plans have reduced their investment return assumptions since fiscal year 2018.  In November the median assumption was 7.0%, the lowest level in more than 40 years, according to the National Association of State Retirement Administrators