As reported earlier this year, Wisconsin Act 32 (the 2011-13 biennial budget) calls for a study of the Wisconsin Retirement System (WRS). The study, due later this week, will examine the establishment of a defined contribution plan, like a 401(k), as an option for participating employees. Employees are currently served by a pension-style defined benefit plan.
The Department of Employee Trust Funds, the Department of Administration, and the Office of State Employee Relations will jointly conduct the investigation, which will also consider allowing employees to opt-out of making contributions to WRS.
Both the Milwaukee Journal Sentinel and Wisconsin State Journal have written extensively on WRS and pension issues. Most recently, the papers noted that the Pew Center on the States found that WRS is fully funded and one of just a few “solid performers” in the country. A fact sheet about the state’s pension fund in 2010 shows that Wisconsin paid 108 percent of the recommended contribution to its pension fund. According to Pew, most experts say that a fund should be at least 80 percent funded. Wisconsin also compares favorably to other states for retiree health care costs, which are 38 percent funded, compared to a national average of just 8 percent.
Governor Scott Walker addressed the Chicago Commercial Club Monday afternoon to talk about pension reforms. Illinois’ pension system is only 45 percent funded, the lowest in the nation according to the Pew report. Walker told reporters after the speech that while he is not currently proposing changes to WRS, he is open to future changes:
“What I’ve said is I’m not proposing any changes at this time. That doesn’t mean I won’t be open to them.”
Any changes to WRS would require approval by the governor and legislature. Walker also noted that he cannot change the benefits of those participants who are already retired.