Pew Center: Wisconsin’s pension fund strongest
Assessment came before last year's budget repair legislation
MADISON, Wis. — Wisconsin is the only state in the nation to receive high marks for its public employee pension system.
The Pew Center on the States report said only Wisconsin has enough money set aside to meet its current obligations for pensions. The “solid performer” ranking is for fiscal year 2010. That’s before Republican Gov. Scott Walker and the Legislature required public employees to contribute more to their pension.
Some states facing financial challenges have moved away from traditional pensions, which guarantee a certain retirement level to employees. The states have moved toward plans similar to a 401K in which employers contribute to an employees’ investment plan, but don’t guarantee results.
The Milwaukee Journal Sentinel said the Pew study found only Wisconsin’s pension system is fully funded, while the national average is 75 percent for state systems.
Walker headed across the border to Illinois on Monday to tout Wisconsin’s pension success, calling it a good reason for businesses to come to the state.
Speaking to the Chicago media, Walker explained why he believes Wisconsin’s pension system comes in first in the country in the Pew Center report and Illinois came in last.
“Where you have a traditional pension system, we have automatic cost of living adjustments,” said Walker. “That makes it very difficult, particularly in tough economic times, and particularly after the market adjustments and drops we saw in 2008.”
Workers in Wisconsin saw a $3.2 billion cut in their pensions since 2008 because the state’s plan cuts benefits if investments do poorly. That’s a major difference from most plans across the country.
But despite the good news, three state agencies, including the Department of Employee Trust Funds, Department of Administration, and Office of State Employment Relations, are due out with a study by July 1. This study looks into whether to make Wisconsin’s plan a hybrid and introduce a 401K plan or even an employee opt-out option. Those are both choices the National Association of State Retirement Administrators said may not be wise.
“It’s always helpful and interesting to look at other models and consider other policy options,” said Keith Brainard, with NASRA. “But I think that if policymakers in Wisconsin were to take a step back and a broad look at the retirement benefit in place for the employees of the state and public school teachers and local governments, they’d realize the plan they have in place works pretty well.”
Walker said Monday he was not planning any changes for current members of the system, and given the pension fund’s strength, he would “proceed with caution.” But he reiterated that he may look at changes for new members entering the system and what could make the program stronger in the future.
The deputy secretary of ETF declined to comment on what changes may be suggested when asked by WISC-TV, saying he couldn’t speak to the study until it was released.