Changes to WRS?

Wisconsin Act 32, the 2011-13 biennial budget, calls for a study of the Wisconsin Retirement System (WRS). The study, due June 30, 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.

The study, coupled with a recently-introduced bill that would allow an alternative to WRS for UW System faculty, has led many annuitants to fear substantial changes to the program are possible. A chain email claiming that Governor Walker will abolish the retirement system as it is today and convert participants to a 401(k)-type of program if reelected is circulating widely throughout the state.

Both WISC-TV and the Milwaukee Journal Sentinel investigated the email and found that the overall claim is false. Wisconsin statutes plainly state that “(r)ights exercised and benefits accrued under this chapter for service rendered shall be due as a contractual right and shall not be abrogated by any subsequent legislative act.” Courts routinely back retirees when changes to already earned benefits are threatened. The statutes, however, allow for changes to the accrual of future benefits.

Remarks by Governor Walker and Secretary of Administration Mike Huebsch confirm that future changes are possible. Governor Walker told WISC-TV in December that he is going to “look at what other options  we have in the future, whether we continue on the traditional path or whether there is some alternative . . . anything we are going to do is going to be about a balance of protecting hardworking taxpayers and providing whatever we might provide in respectful and responsible way.”  He also said that he did not “anticipate anything in the future that wouldn’t allow them (WRS participants) to continue in that pension system if that’s what they prefer to do.”

Secretary Huebsch told the Journal Sentinel that he was not looking at doing away with WRS, but the goal of the study is to determine the stability of the system and ensure its long-term health, unlike several underfunded systems in other states. In a possible effort to allay fears, Huebsch also sent a letter to WRS participants last week: