Pension decision explained

The Office of Employee Compensation and Benefits offers help for employees who want to better understand recent changes to the Wisconsin Retirement System.

Until recently, the public employee pension improvement law passed in late 1999, better known as Act 11, was on hold while the Wisconsin Supreme Court examined a challenge by two labor unions. Kathleen O’Rourke-Benjamin, associate director of the Office of Compensation and Benefits, says the court challenge frustrated a lot of university employees. “We would often get inquiries like, ‘I want to retire. I need more information,'” she says.

The Wisconsin Supreme Court finally approved the law June 12, which includes the following:

Increased retirement benefits

Act 11 clears the way for a special dividend increase for Wisconsin Retirement System participants whose annuities began in 1999 or earlier.

The dividend adjustment of 9.6 is for the fixed fund only and is retroactive to May 1, 2000. This special dividend was included on retirement checks dated July 1, 2001.

Many retirees also will receive a fixed fund dividend adjustment of .6 retroactive to May 1, 2001 on retirement checks dated Aug. 1, 2001.

Employees who worked under WRS beyond Jan. 1, 2000 will have improved retirement benefits because the formula factors for retirement calculations have been increased. The increased formula factors apply to years of creditable service prior to Jan. 1, 2000.

In addition to improved future retirement benefits, active employees will see increased WRS account balances retroactive to calendar year 1999. Act 11 provides for a higher investment return to be credited for the fixed fund for calendar year 1999 and also eliminates the 5 interest cap that was applicable to many employees.

Employees will receive their Annual WRS Statement of Benefits for Jan. 1, 2001 in early October. This statement will also include a supplement explaining the changes to the Jan. 1, 2000 balances.

Participation in the Variable Trust Fund

Active employees can now elect to have future retirement contributions invested in the variable trust fund. The variable trust fund is invested primarily in the stock market and will experience a fluctuating return of gains and losses. Variable participation is not retroactive, therefore, employees cannot transfer existing fixed account balance to the variable fund.

Improved death benefits

As a result of Act 11, the death benefit payable when an employee dies prior to termination of WRS employment will be based on the total value of the WRS account regardless of the age of the employee or who is named as the beneficiary. This provision substantially increases the value of death benefits.

Employee Compensation and Benefits Services will offer presentations for UW–Madison employees who want to learn more about the provisions and to get their questions answered. Presentations are scheduled for:

• Wednesday, Aug. 15, 2-3 p.m., Red Gym, On Wisconsin
• Thursday, Aug. 16, 9-10 a.m., Red Gym, On Wisconsin
• Tuesday, Aug. 21, 4-5 p.m., Red Gym, On Wisconsin
• Thursday, Aug. 23, 10-11 a.m., 109 Union South
• Tuesday, Sept. 11, 2-3 p.m., 109 Union South
• Wednesday, Sept. 12, 10-11 a.m., Memorial Union, Tripp Commons
• Tuesday, September 18, 10-1l a.m., Memorial Union, Tripp Commons
• Friday, September 21, 9-10 a.m., 109 Union South

  Act 11 information is also available at the Department of Employee Trust Funds.