At its June 23, 2016 meeting, the Employee Trust Funds Board approved Wisconsin Retirement System contribution rates for 2017, including rates for Wis. Stat. § 40.65 protective occupation duty disability and the State Accumulated Sick Leave Conversion Credit Program (state employers only). These rates are based on current benefit levels and recommendations from the Board’s independent consulting actuary.
Employers who have either elected to increase prior service coverage or pay off their unfunded liability balances may also experience a change in their prior service rates.
Factors Impacting WRS Rates
There are many complex factors that affect WRS contribution rates, such as investment performance, legislative adjustments to benefit levels, demographics, etc. It is important to remember, WRS investment experience is smoothed over a course of five years to prevent large swings in WRS contribution rates.
WRS rates are increasing in 2017 due to increases in life expectancy and low investment returns.
2011 Wisconsin Acts 10 and 32 in most cases prohibited WRS employers from paying the employee-required portion of the WRS contribution. The 2017 rate change will be split equally between the employee and employer for general employees, executives, elected officials and judges for 2017. Act 10 requires that the employee-required contribution for protective occupation employees be equal to the employee-required contribution for general employees.
The annual actuarial valuation incorporates current economic and demographic data into the existing financial condition of the WRS in order to set new contribution rates for the system. It is normal for contribution rates to fluctuate somewhat from year to year, based on investment earnings, wage inflation and demographic trends. In addition, the change in contribution rates may vary between employment categories, depending on varying demographic trends within those groups. Benefits being paid to current annuitants are not affected by these rate changes.