OUR WISCONSIN RETIREMENT SYSTEM - Strong for Wisconsin - Wisconsin Department of ...

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OUR WISCONSIN RETIREMENT SYSTEM - Strong for Wisconsin - Wisconsin Department of ...
OUR WISCONSIN
RETIREMENT SYSTEM
 Strong for Wisconsin
OUR WISCONSIN RETIREMENT SYSTEM - Strong for Wisconsin - Wisconsin Department of ...
ETF executive team:
                                                                                                 Pam Henning, Assistant Deputy Secre-
                                                                                                 tary; Bob Conlin, Secretary; and John
                                                                                                 Voelker, Deputy Secretary.

                                   Wisconsinites should be proud to have a strong public pension system – one of the best
                                    funded in the country. The continued due diligence and oversight of policymakers and
                                      sound funding principles keep our Wisconsin Retirement System capable of paying
                                       promised benefits long into the future.

                                         Today more than 648,000 current and former state and local government employees and
                                          their families rely on the WRS for some of their retirement security. These individuals,
                                           along with their employers, contribute to the WRS throughout their careers.

                                              Public employees provide crucial health, education, safety, transportation and
                                               other services in our communities. And in return, the WRS provides a modest
                                                retirement income; the median annual pension is $21,923. The WRS pays nearly
                                                  $5.6 billion in benefits annually – a large portion of this money gets spent in
                                                   Wisconsin by the more than 85% of retirees who live here.

                                                      In these pages we’ve provided some useful information about the WRS.
                                                       I encourage you to get better acquainted with why the WRS is strong
                                                         for Wisconsin.

                                                           Sincerely,
WISCONSIN STATUTE CHAPTER 40
The WRS trust funds were created to:
• Protect public employees and their
   beneficiaries against the financial hardships
   of old age and disability.                                    Robert J. (Bob) Conlin
• Attract and retain a qualified public workforce.               Secretary
• Establish modest and portable benefits to                       Wisconsin Department of Employee Trust Funds
   move with employees throughout their careers
   into retirement.
• Achieve administrative expense savings.

 2 | OUR WISCONSIN RETIREMENT SYSTEM
OUR WISCONSIN RETIREMENT SYSTEM - Strong for Wisconsin - Wisconsin Department of ...
$
   112.1                      BILLION
                               IN ASSETS          9th         LARGEST
                                                               IN THE USA           25th               LARGEST
                                                                                                        IN THE WORLD
 With approximately $112.1 billion in assets, the WRS is the 9th largest U.S. public pension fund and the 25th largest
  public or private pension fund in the world. There are more than 648,000 individuals who participate in the WRS.

   215K                              173K
                                                                  1,516                              260K
         annuitants                former public employees
   (retirees, disabilitants          with deferred benefits
     and beneficiaries)
                                                                     state and local                public employees in
                                                                   government units              Wisconsin’s state agencies,
                                                                 throughout Wisconsin              University of Wisconsin
       OYEES BY E
   EMPL           MP
                                                                                                 System, technical colleges
                                          LO                                                     and school districts, cities,
                                            YE                                                    counties, and local units
                                                 R                                                     of government

                      Counties
                                                  TY

   Cities
                       33,007       Towns,
                                                    PE

   22,448
                                                                                         N             T CATEGORY
                                                                                      YME
                                   Villages &
                                    Special
                                                                                    LO
                                    Districts
                                     9,281                                       M P
                                                                               YE
                                                                          B
                                                                          S
                                                                       EE
                                                                   LOY

                                     State Agencies                                                   General
School                                & University                                                    134,166
                                                                EMP

Districts                                74,760
111,700

                              Technical                  Protective
                              Colleges                  Occupations         Protective
                                9,055                     without          Occupations
                                                       Social Security     with Social
                                                           2,768             Security                          Teachers
                                                                              19,665                            102,330

                                                      Executive/Elected
                                                           1,322

                                                                   D E PA RT M E N T O F E M P LOY E E T R U ST F U N D S    |   3
OUR WISCONSIN RETIREMENT SYSTEM - Strong for Wisconsin - Wisconsin Department of ...
WRS: Well Designed = Well Funded
                              The WRS is a hybrid defined benefit plan. It contains elements of both a 401(k) or defined
                               contribution plan and a defined benefit plan. The WRS is a strong public pension plan
                                because of its stable funding, unique plan design and robust governance. These factors
                                 set the WRS apart from the vast majority of other plans in the United States.

                                   Although a number of plans are near or above 100% advance-funded, on average
                                    the funded level in 2018 was 73%; 18% were less than 60% funded. The WRS is
                                      100% funded.

                                        Here are a few reasons why the WRS is successful:

                                         PRE-FUNDED
                                           • Contribution rates are determined annually by an independent actuary.
                                            • Amounts paid by both employees and employers are paid in full, not
                                                deferred into the future.
                                               • Funds are invested for longer periods, which minimizes the chances that
                                                   one generation will have to pay for the obligations of another.

                                                 Pre-funding calculation:

                                          B = C + I – E
                                          Benefit
                                         payments
                                                              Contributions           Investment
                                                                                        earnings
                                                                                                               WRS
                                                                                                           administrative
                                                                                                             expenses

“Wisconsin has done a very good job
of keeping contribution rates stable.”
    — GRS & Company, WRS consulting actuary

 4 | OUR WISCONSIN RETIREMENT SYSTEM
OUR WISCONSIN RETIREMENT SYSTEM - Strong for Wisconsin - Wisconsin Department of ...
SHARED COSTS & SHARED RISKS
Investment risks and costs of the WRS are shared between government employees, employers (taxpayers)
 and retirees. Unlike members of other public pension plans, WRS employees and retirees bear most of the risk.
  • Contribution rates are generally split evenly between employees and employers and adjusted annually,
      ensuring full funding of future benefits.
     • Post-retirement adjustments (dividends) depend on investment performance and can be reduced based
         on annual investment returns.
        • No guaranteed cost of living adjustments or COLAs.
         • Annuities cannot be reduced below the original amount set at retirement.

         FINANCIALLY SOUND
          The financial strength of the WRS ensures that benefit promises made today can be
           kept without burdening future generations.

             • Sustainable – Assets are sufficient to pay all benefits when due.
              • Contribution Stability and Predictability – Employee and employer annual pension
                  contributions are paid in full and the contribution rates have remained stable over time.
                 • Intergenerational Equity – The cost of benefits are paid by those who receive the
                      benefits, not passed on to the next generation.
                     • Realistic Rate of Return on Investments – An assumed rate of return of 5.0% for retirees and
                         7.0% for active employees is used to determine plan liabilities. These rates are lower than the
                          national median of 7.25%.
                         •M odest Benefits – The median annual retirement benefit is $21,923.

                        Funds to pay pension benefits are generated from three sources:
                         1. Employee Contributions
                          2. Employer Contributions
                           3. Investment Earnings

                                                                                          Investment Earnings

                                                                                                                Employers

                                                                                                                            Employees

                                                                                    80¢ 10¢ 10¢

                                                             D E PA RT M E N T O F E M P LOY E E T R U ST F U N D S         |    5
OUR WISCONSIN RETIREMENT SYSTEM - Strong for Wisconsin - Wisconsin Department of ...
WRS: Well Managed
Investment earnings                     WRS pension benefit and administrative expenses are paid from the

80%
comprise approximately                   WRS trust funds, not from general state operating revenues.

                                           • Low Administrative Costs – The WRS spends $11 less than the peer
                                               average of $98 per active member and annuitant.
                                             • Low Cost for Taxpayers – Wisconsin state and local governments
                                                 spend 2.1% of their budgets on the WRS, compared to the national
   of revenues needed to fund the WRS             average of 5.2%*. No general taxes are required to support the WRS.
                                                 •L
                                                   ow Unfunded Liabilities – Wisconsin is 1 of 3 states with the
                                                    lowest levels of unfunded liabilities or long-term debt for public
“While it is a misconception to hold                 employee pensions.
that there is a one-size-fits-all
                                                     •S
                                                       trong Investment Earnings – The State of Wisconsin
solution to plan design and financing,
                                                        Investment Board professionally and prudently manages and
there are core principles that are
pervasive among public retirement                        invests the assets of the WRS. Approximately 80% of WRS
plans: mandatory participation, shared                    benefits paid come from investment earnings.
financing, benefit adequacy, pooled                       •E
                                                            fficient – The WRS provides lifetime benefits by
investment and longevity risks, and                          pooling mortality and other risks for more than
lifetime benefit payouts.”                                    648,000 participants.
    —N
      ational Association of State                           *percentages include City and County of Milwaukee
     Retirement Administrators

 6 | OUR WISCONSIN RETIREMENT SYSTEM
OUR WISCONSIN RETIREMENT SYSTEM - Strong for Wisconsin - Wisconsin Department of ...
“You know you’re in the right job when you go
               to work every day and say to yourself that you
            get to serve the citizens of this county. I welcome
             the challenge of providing safe roads for people
                to travel. There is a great deal of satisfaction
               in exceeding the public’s expectations when it
           comes to the quality of service that we can deliver
                   to improve the quality of everyone’s lives.”
                          Jim, Fond du Lac County employee
                                           and WRS Member

D E PA RT M E N T O F E M P LOY E E T R U ST F U N D S   |   7
OUR WISCONSIN RETIREMENT SYSTEM - Strong for Wisconsin - Wisconsin Department of ...
WRS: Economic Impact
                   A well-funded and well-managed retirement plan is not only good for employees,
                    it’s also good for Wisconsin. More than 85% of WRS pensions go to retirees living
                     in Wisconsin, who purchase goods and services and pay taxes.

                                                                               M O N T H LY P E N S I O N
                                                                              PA Y M E N TS B Y CO U N T Y
                                           Bayfield
                       Douglas            $1,567,575
                      $3,352,815             832
                        1736
                                                                             Iron
                                                                           $520,629
                                                           Ashland           290
                                                          $1,262,811                              Vilas
                                                             670                               $2,173,007
                                                                                                  1074
          Burnett       Washburn
                        $1,835,467            Sawyer                                                                             Florence
          $770,244                           $1,302,335                                                                          $265,014
            443            972
                                                698                                             Oneida                              155
                                                                       Price                   $4,130,581
                                                                     $1,120,041                  2014
                                                                        601                                            Forest
        Polk                                                                                                          $647,478
      $2,220,992                               Rusk                                                                     371              Marinette
                        Barron               $1,080,670                                                                                  $2,731,505
        1267           $3,286,188               645                                                                                        1449
                         1728                                                            Lincoln
                                                                                        $2,799,765           Langlade
                                                                 Taylor                   1428               $1,614,974
                                                                $903,992                                        859
                                       Chippewa                   473
     St. Croix
    $2,948,191                         $4,950,505                                                                    Menominee
       1585            Dunn              2680                                                                          $165,503
                     $3,864,600                                                         Marathon                         91                  Oconto
                       1867                                                             $7,741,164              Shawano                     $2,379,056          Door
                                                             Clark                        3841                  $2,235,072                    1142            $3,198,388
      Pierce                            Eau Claire
     $2,819,101                                            $1,582,697                                             1212                                          1522
                                        $9,610,983            882
       1336                               4482
                                                                                                                                                              Kewaunee
                                                                                                 Portage        Waupaca                                       $1,290,787
           Pepin         Buffalo                                                Wood            $5,877,155      $4,325,998     Outagamie     Brown               623
          $420,481       $925,285                                             $6,184,151          2735            2249         $10,318,550 $16,764,818
            234            482                          Jackson                 2955                                             4765         7347
                                                       $1,328,512
                                    Trempealeau           771
                                      $2,101,775                                                       Waushara                                  Manitowoc
                                        1157                                          Adams            $1,926,685         Winnebago Calumet      $5,266,954
                                                                                      $720,612           1000             $12,810,581 $1,398,658   2647
                                                            Monroe                      432                                  5839        725
                                           La Crosse       $2,182,670                              Marquette
                                           $8,789,719        1284                                  $1,404,350
                                             4280                            Juneau                                           Fond du Lac
                                                                                                      746 Green Lake           $7,214,154          Sheboygan
                                                                            $1,543,255                       $1,523,049
                                                                               872                                               3427               $8,082,521
                                                                                                                749                                   3798
                                                    Vernon
                                                   $2,098,282
                                                     1193                                            Columbia
                                                                                    Sauk                                   Dodge                         Ozaukee
                                                                                  $5,221,358         $6,469,066                         Washington       $7,003,019
                                                                Richland                               3118               $6,677,751
                                                                $1,206,258          2598                                    3228         $7,911,456        2928
                                                     Crawford      700                                                                     3583
                                                     $900,560
                                                        523
                                                                                                    Dane
                                                                                                  $79,027,190         Jefferson        Waukesha
                                                                             Iowa                   29686             $5,059,291       $27,306,149 Milwaukee
                                                                                                                                                   $33,050,831
KEY:                                                      Grant
                                                                           $1,768,214
                                                                              884
                                                                                                                        2481             11266
                                                                                                                                                     13346
County                                                  $4,053,774
                                                          2065                                                                                               Racine
$ Total Monthly Payments                                                   Lafayette          Green             Rock           Walworth                    $14,596,408
                                                                                            $3,038,712       $10,325,553                                      6257
# of Payees                                                                $1,177,811
                                                                                              1437              4879
                                                                                                                               $6,222,628
                                                                              642                                                2944
                                                                                                                                                Kenosha
Payments as of December 2019                                                                                                                    $7,116,347
                                                                                                                                                  3217

8 | OUR WISCONSIN RETIREMENT SYSTEM
OUR WISCONSIN RETIREMENT SYSTEM - Strong for Wisconsin - Wisconsin Department of ...
WRS Creates Jobs, Supports Wisconsin's Economy

                                                                                 1 in 5 Wisconsin residents are either
                                                                                  a WRS member or are affected by
                                                                                    the WRS as a family member.

           53K
                                                                                     $
                                                                                        5.6 Billion
  Expenditures from public                                                          The WRS paid $5.6 billion in
   pensions supported 53,011                                                             benefits in 2019.
    jobs in Wisconsin that
     paid $2.7 billion in wages
      and salaries, and
       generated $1.6 billion
        in federal, state and
         local tax revenues.*
                                            $
                                               2.7 Billion
                                                                                                 $
                                                                                                    1.6 Billion
              *Pensionomics 2021: Measuring the Economic Impact of DB Pension Expenditures, report by the National Institute on Retirement Security

                                                                   D E PA RT M E N T O F E M P LOY E E T R U ST F U N D S                   |    9
OUR WISCONSIN RETIREMENT SYSTEM - Strong for Wisconsin - Wisconsin Department of ...
WRS: Strong Public Workforce
          The WRS is an important incentive for qualified workers to choose and
           stay in public service. Employees often accept lower wages now for future
            retirement compensation.

              The 1,516 state and local government employers participating in the WRS under-
               stand the value of a well-funded and well-managed retirement plan. Additional
                local government employers continue to join the WRS. Over the past
                 5 years, 54 local governments have chosen to join the system.

                           At a time when state and local governments are struggling to attract and
                           retain employees to deliver vital taxpayer services, a new national poll finds
                            that retirement and healthcare benefits are critically important job features,
                             more so than salary. These benefits are viewed as a powerful recruitment and
                            retention tool, with nearly all state and local workers (93%) saying that pensions
                             incentivize public workers to have long public service careers, and 94% agreeing
                                   that a pension is a good tool for both attracting and retaining employees.
                                    — National institute on Retirement Security, State and Local Government
                                           Employee Views on Their Jobs, Compensation and Retirement

                                                                              The WRS benefits package is a
                                         EMPLOYEES BY                            valuable recruitment tool available
                                                              EM
                                                                PL                to the State of Wisconsin, local
                                                                  O                governments, technical colleges
                                                                     YE

                                                                                     and school districts throughout
                                                                       RT

                                                                                      the state.
                                                                         YP

                                                          29%
                                                                           E

                                                          State
                                                       Government

       AVERAGE                                                                             ARS OF SERVICE
      WRS RETIREE                                                                     E YE
                                                                                   RAG
                                                                                 VE
                                                                             A

                                                      71%
                                                                                                              10.0
             60                                       Local
                                                   Government
                                                                                        13.7
                                                                                    Executives &             General
        Retirement Age                                                                Elected

             21
        Years of Service                                                                                           12.6
                                                                                                                 Teachers
        $21,923                                                                     12.0
        Median Annual                                                          Protective with
           Benefit                                                             Social Security

                                                                                                        13.9
                                                                                                 Protective without
                                                                                                   Social Security
10 | OUR WISCONSIN RETIREMENT SYSTEM
Ramzan, a retired WRS member, enjoyed
his career as a state facilities engineer.
Throughout his working years, he was able
to maximize his WRS pension by making
additional contributions to his account,
thereby contributing to a secure and stable
income for his retirement years.

                                              D E PA RT M E N T O F E M P LOY E E T R U ST F U N D S   |   11
Check out ETF’s Government Relations page for:
                                 •P roposed Wisconsin legislation and laws affecting
                                  the WRS and ETF
                               • Federal issues and legislation
                              • WRS fact sheets, studies and reports
                             • National trends and research
                            • ETF action items

                           etf.wi.gov/about-etf/government-relations

                      Contact Us
                     Director of Strategic Engagement       Communications Director
                    and Government Relations               Mark Lamkins
                   Tarna Hunter                           608-266-3641
                  608-267-0908                           mark.lamkins@etf.wi.gov
                 tarna.hunter@etf.wi.gov

               Stay Connected
             etf.wi.gov
            etf.wi.gov/about-etf/government-relations

      Wisconsin Department of Employee Trust Funds
     P.O. Box 7931
    Madison, WI 53701-7931

  Customer Service Toll Free
 1-877-533-5020

ET-7100 (REV 12/31/2020)       © 2020 ALL RIGHTS RESERVED
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