Market Losses Lead to WI Pension Payment
Cutbacks
January 9, 2009 (PLANSPONSOR.com) - For the first
time in the 26-year-history of the Wisconsin Retirement
System, pension checks drawn on the Core Fund will fall by at
least 2.5%, a casualty of the market losses afflicting
pension plans around the country.
Many retirees and beneficiaries will see an even
bigger bite out of their checks, according to a Milwaukee
Journal Sentinel article, with their new benefit
payouts
plummeting by double-digit percentages. The cuts are
scheduled to go into effect in May, with the amounts set to
be calculated in February.
The Core Fund lost 26.2% of its value in the last
year, ending 2008 at $57.8 billion, down from $80.7
billion.
The Journal Sentinel reported that the
approximately 113,000 retirees and employees who
earmarked half their retirement money to the aggressive,
all-stock Variable Fund are expected to be hardest hit.
That fund lost 39% of its value in the market last year
and had $4 billion on December 31.
Approximately 25% of the government retirees
covered by the system had money in the Variable Fund,
Matt Stohr, spokesman for the state Department of
Employee Trust Funds, told the Journal Sentinel. The
portion of their pension checks covered by the Variable
Fund will plummet by up to 45%, he said.
Pensions funded entirely by the Core Fund currently
average $1,791 monthly, while those invested in the
Variable Fund receive about $2,045 monthly, Stohr
said.
The Investment Board manages money on behalf of the
state retirement system, which covers about 540,000
retirees and active employees of school districts, the
state and local governments throughout Wisconsin. Among
them are 145,000 government retirees.
By law, all active and retired participants must
have at least half their money in the Core Fund, a
diversified account that includes stocks, bonds and real
estate, the newspaper said. Participants are allowed to
place 50% of their retirement account in the Variable
Fund.
More information is available
here
.
Fred Schneyer
editors@plansponsor.com