Today, the much-anticipated (and, by some, much-feared) report on the Act 32-mandated study of the Wisconsin Retirement System was released.
The introduction to the Executive Summary reads as follows:
The Wisconsin Retirement System (WRS) is an efficient and sustainable retirement system. According to the analysis prepared by Gabriel, Roeder, and Smith (the independent consulting actuary for the WRS), the WRS is insulated from large swings in annual contribution rates or funding levels due to the plan’s cost-sharing and risk-sharing features. For example, since the market collapse of 2008, annuities have been reduced by almost $3.2 billion. As a result, the WRS was able to weather much of the financial storm.
And here is the summary recommendation:
Given the current financial health and unique risk-sharing features of the WRS, neither an optional DC plan nor an opt-out of employee contributions should be implemented in Wisconsin at this time. Analysis included in this study from actuaries, legal experts, financial experts, and information from similar studies conducted in other states show that there are significant issues for both study items in terms of the actual benefit provided and potential for negative effects on administrative costs, funding, long term investment strategy, contribution rates, and individual benefits.
The overall tone of the report is very supportive of the current structure and management of the WRS. In particular, there appears to be no support for moving from a defined benefit plan to a defined contribution plan, which was one of the biggest fears of those currently depending on the WRS for their retirement security.
On the whole, this is very welcome news for those who feared that the report might provide cover for politically motivated meddling with the WRS. We trust now that the findings and recommendations in this report will guide the actions of the state legislature and the governor’s office.
The complete report can be viewed here (PDF, 1.5 MB)
An accompanying article by the Wisconsin State Journal can be viewed here.
Readers who have taken the time to read through the recommendations are encouraged to comment below.