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).