Wisconsin Retirement System

Wisconsin Retirement System

Informational Paper 83

Wisconsin Legislative Fiscal Bureau

January, 2015

Wisconsin Retirement System

Prepared by

Paul Onsager

Wisconsin Legislative Fiscal Bureau

One East Main, Suite 301

Madison, WI 53703



TABLE OF CONTENTS

CHAPTER 1: HISTORY OF THE WISCONSIN RETIREMENT SYSTEM .................................................................... 1

Pre-1948 Milestones ....................................................................................................................................... 1

Changes Since 1948 ....................................................................................................................................... 4

CHAPTER 2: COVERAGE OF THE WISCONSIN RETIREMENT SYSTEM .............................................................. 10

Employer Participants .................................................................................................................................. 10

Employee Participants .................................................................................................................................. 11

CHAPTER 3: ADMINISTRATIVE AND OVERSIGHT STRUCTURE OF THE WISCONSIN RETIREMENT SYSTEM .........15

WRS Policy Boards ...................................................................................................................................... 15

Other Employee Trust Funds Boards........................................................................................................... 18

The Department of Employee Trust Funds ................................................................................................. 19

The State of Wisconsin Investment Board .................................................................................................. 21

Legislative Oversight ................................................................................................................................... 24

CHAPTER 4: FUNDING THE WISCONSIN RETIREMENT SYSTEM ...................................................................... 27

WRS Accounts and Reserves ....................................................................................................................... 28

Management and Investment of WRS Assets ............................................................................................. 29

Retirement Funds: Valuation and Distribution of Investment Earnings .................................................... 32

Retirement Funds: Crediting the Annual Investment Experience ............................................................. 36

Retirement Funds: Long-Term Investment Objectives and Performance ................................................. 38

Funding the Retirement System: The Impact of Revenues from Investment Earnings ............................ 41

Funding the Retirement System: Employee Contributions ........................................................................ 42

Funding the Retirement System: Employer Contributions ........................................................................ 47

Long-Term Employee and Employer Contribution Rate Stabilization ...................................................... 53

CHAPTER 5: WRS BENEFITS ......................................................................................................................... 54

Separation Benefits....................................................................................................................................... 55

Retirement Benefits: The Formula Benefit Annuity .................................................................................. 57

Retirement Benefits: Adjustments Applicable to the Formula Benefit Annuity ....................................... 62

Retirement Benefits: The Money Purchase Annuity .................................................................................. 64

Retirement Benefits: Calculation of Benefit Amount ................................................................................ 65

Retirement Benefits: Annuity Payments..................................................................................................... 68

Division of WRS Benefits and Annuities .................................................................................................... 71

Disability and Survivor's Benefits................................................................................................................ 73

CHAPTER 6: POST-RETIREMENT BENEFIT ADJUSTMENTS............................................................................. 78

Post-Retirement Dividend Payments ........................................................................................................... 78

Post-Retirement Benefit Supplements ......................................................................................................... 81

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