Longtime participants in the Wisconsin Retirement System will see another cut in their monthly pension checks as the state continues to smooth out losses from the 2008 stock market plunge.
Figures released Friday by the state Department of Employee Trust Funds show a -9.6 percent decline in the Core Fund and a +9.0 percent increase for the Variable Fund. The new rates are effective May 1 and last for a year.
Rates have fallen for five consecutive years after never having fallen before.
The changes are based on WRS data, actuarial calculations and investment returns from the State of Wisconsin Investment Board. Individuals may see different adjustments depending on when they started receiving benefits.
By law, an individual’s annuity cannot be reduced below the original amount set at retirement — or their “Core floor.”In general, anyone who retired after 2000 has now hit their floor with the latest adjustment.
Approximately 63,249 retirees, or less than half of the more than 167,000 retired public workers, will have dividends remaining after this year’s decrease.
“Another annuity cut is hard for our retirees,” said ETF Secretary Robert Conlin in a statement. “We know it’s not easy, but with 2008 finally behind us, better days should lie ahead.”
With this year’s Core Fund annuity decrease, retirees will have seen their annuities reduced by a total of more than $4 billion since 2008. Those adjustments are part of the risk-sharing nature of the WRS, which spreads gains or losses over time to avoid wild fluctuations.
SWIB has experienced positive returns over the past four years and if the stock market continues on a upward trend in 2013 — the Dow Jones Industrial Average has tickled all-time highs this week — things should improve for retirees next year.
About 40,000 retirees also participate in the higher-risk, optional Variable Fund, which will deliver a 9 percent increase to that portion of their annuity beginning May 1. Investment gains and losses in that fund are fully recognized each year.
The state pension system serves approximately 570,808 individuals, including current public employees, non-retired former employees and and annuitants -- including retirees, disability recipients and beneficiaries.
Core Fund assets experienced a $21 billion investment decline in 2008. Without the five-year smoothing of losses, annuities would have been reduced by up to 35 percent in 2009. Instead, annuities were decreased 2.1 percent in 2009, 1.3 percent in 2010, 1.2 percent in 2011 and 7 percent in 2012.