Market Losses Lead to WI Pension Payment Cutbacks

January 9, 2009 ( - 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 .