State retirement funds post strong gains from 2010

2011-01-12T05:30:00Z 2011-01-12T18:31:34Z State retirement funds post strong gains from 2010JUDY NEWMAN | jdnewman@madison.com | 608-252-6156 madison.com

A good showing for the stock market in 2010 has helped boost the state's retirement accounts for public employees.

But it's too soon to tell if the increase will be enough to avert another reduction in the pensions of some retirees, officials said Tuesday.

The Wisconsin Retirement System's two trust funds held $79.1 billion as of Dec. 31, reported the State of Wisconsin Investment Board, which manages the money. The results are up from $72.9 billion a year ago and $61.8 billion at the end of 2008.

"That fourth quarter was really critical for what happened to our returns," investment board spokeswoman Vicki Hearing said.

In October, the Dow Jones industrial average saw its biggest monthly gain since 2006, rising 3 percent. The Dow ended the year up 11 percent, and other major indices also saw double-digit gains. The Russell 2000 rose 25 percent.

The retirement system's Core Fund had a preliminary market value of $73.5 billion, with a return of 12.3 percent. The Core Fund is a diversified fund and the main account for all 560,000 current or former state and local government, university or school employees who participate in the Wisconsin Retirement System.

The Variable Fund ended the year at $5.6 billion, with a return of 15.6 percent. More than 100,000 retirees and current employees have money in the optional, all-stock portfolio.

For the past two years, pensions for thousands of retirees in the program have been reduced because of stock market troubles in 2008. Pensions are figured based on a formula that smooths Core Fund results over five years to protect retirees from the ups and downs of Wall Street.

It is expected to be March before the state Department of Employee Trust Funds announces where pensions will stand this year. Spokesman Matt Stohr told The Associated Press payments could remain unchanged or drop slightly because of the continuing impact of the 2008 losses.

The Wisconsin Retirement System is the ninth-largest U.S. public pension fund and the 30th-largest public or private pension fund in the world.

[Editor's note: This story was updated to clarify that percentages are returns, not increases.]

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