Study finds WRS stable, recommends no changes to pension system
A report issued jointly this week by three state agencies recommends against the state implementing a defined contribution plan or an opt-out option in the Wisconsin Retirement System.
The study found the system highly funded and stable, with the funding ratio remaining above 90 percent for the last 20 years and at nearly 100 percent since 2004.
An analysis from Gabriel Roeder, and Smith, the system’s actuary, found that the WRS is insulated from major shifts in annual contribution rates or funding levels because of effective cost- and risk-sharing features of the plan. The authors recommended no changes to the current system.
“Given the current financial health and unique risk-sharing features of the WRS, neither an optional (defined contribution) plan nor an opt-out of employee contributions should be implemented in Wisconsin at this time,” the authors of the study wrote in the executive summary of the report. “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.”
Last week, Gov. Scott Walker said he would be open to changes to the system depending on the outcome of the study. On Monday, Walker said the report confirms “both taxpayers and pensioners are getting a great deal” with WRS, and he would not be making any changes to the WRS.
“I want to be very clear: I am currently not planning to make any substantial changes to the WRS,” Walker said in a press release. “However, I will continue to work to ensure that the WRS is fiscally sustainable for both taxpayers and retirees.”
The state report follows a Pew Center on the States study last month that showed Wisconsin’s pension system to be the only one in the nation to be 100 percent funded.
The 2011-13 biennial state budget bill required a study of the WRS, the pension system for state employees. The study was conducted by the state departments of Administration and Employee Trust Funds, and the Office of State Employment Relations.