Wisconsin Retirees Will See Payments Cut for a Second Year

March 11, 2010 (PLANSPONSOR.com) - For the second year in a row, the Wisconsin Retirement System will reduce monthly payments to retirees invested in the system's Core Fund annuity.

The Milwaukee Journal Sentinel reports that beginning May 1, payments from the Core Fund – which holds the largest share of the pension plan’s assets – will drop by 1.3% a month. That follows last year’s first-ever decrease of 2.1% (see Market Losses Lead to WI Pension Payment Cutbacks), and is higher than the 1% decrease estimated in January.

The cut this year is still an effect of the 2008 market decline. Though the Core Fund returned 22.4% in 2009, its third-highest gain in the system’s history, that did not make up for the 26.2% drop in 2008.

Retirees participating in the optional Variable Fund will see an increase of 22% on that portion of their annuities, according to the news report. The Variable Fund had a return of 22.7% last year – the highest gain in the history of the fund.

All 150,000 Wisconsin Retirement System retirees get at least half of their pension in the form of a Core Fund annuity.

The announcement of the cut in payments follows a recent report highlighting the disparities between public and private employee pensions in the state (see Report Highlights Public and Private Pension Disparities in Wisconsin).