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Study of WRS Released: Governor Says No Significant Changes Planned

Posted by on Monday, July 02, 2012 in State Legislation/Initiatives

A study of the Wisconsin Retirement System (WRS), requested by the state legislature and released June 30, recommended no changes to the system, echoing the Pew Center on the States recent report finding the WRS among the best-managed state pension systems in the nation.

In its most recent session, the state legislature passed 2011 Wisconsin Act 32, requiring a study of the WRS structure and benefits by the the Secretary of the Department of Employee Trust Funds, the Secretary of the Department of Administration and Director of the Office of State Employment Relations. 

Act 32 required the study to address: 1) establishing a defined contribution plan as an option for participating employees; and 2) permitting employees to not make employee required contributions, and limiting retirement benefits for employees who do not make employee required contributions to a money purchase annuity.

Findings and recommendations were due to Governor Walker and the Joint Committee on Finance no later than June 30, 2012. 

From the full study, the executive summary describes benefits of the current system along with potential alternative retirement plans and concludes:

"Given the current financial health and unique risk-sharing features of the WRS, neither an optional DC (defined contribution) plan nor an opt-out of employee contributions should be implemented in Wisconsin at this time. Analysis included in this study from actuaries, legal experts, financial experts, and information from similar studies conducted in other states show that there are significant issues for both study items in terms of the actual benefit provided and potential for negative effects on administrative costs, funding, long term investment strategy, contribution rates, and individual benefits"

Governor Walker issued his response in a news release today, concluding, "I want to be very clear: I am currently not planning to make any substantial changes to the WRS. However, I will continue to work to ensure that the WRS is fiscally sustainable for both taxpayers and retirees."

The Pew Center on the States recently issued a report on state pension programs, calling Wisconsin's one of the best funded and rating Wisconsin a "solid performer" for both pensions and retiree health care.

 

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