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1115, 28 Mar 17

Tweaking the WRS

My column for the West Bend Daily News is online. Here you go:

The Wisconsin Retirement System is a great example of government working well. Thanks to decades of prudent management by both Democrats and Republicans, it has provided an ample retirement income to generations of Wisconsin’s public employees and remains one of the only fully funded public pension systems in the nation.

The operative word in the phrase “prudent management” is “management,” and that is what state legislators need to continually do. Making sensible small changes in the present makes massive sweeping changes unnecessary in the future.

Sen. Duey Stroebel (R-Saukville) and Rep. Tyler August (RLake Geneva) have reintroduced a bill that would raise the minimum retirement age for most new public employees from 55 to 60 and from 50 to 52 for public safety workers. Doing so would add solvency to the WRS and reduce pension contributions by the taxpayers by an estimated $59 million now and millions more in the future.

Most public employees in the WRS can receive their full retirement benefits beginning at 65, but they can retire early at 55 and take a fraction of their retirement based on their years of service. For example, if a public employee begins working at 25 and takes early retirement at 55, that employee would receive about 90 percent of their full retirement benefit. If that same worker only had five years of employment, his or her retirement benefits would be less.

What Stroebel and August are proposing is simply to slightly raise the minimum age at which an employee would be eligible for early retirement. Retirees would still be able to retire early if they are eligible and retire with their full benefits at the same age. And it would only apply to new employees. Current employees would not be impacted.

The reasoning is simple. People live longer. In 1960, the average life expectancy in the U.S. was 69.77 years. In 2012, it was 78.74 years. In other words, retirees are receiving many more years of retirement income than they used to. And more of those retiring early at 55 are spending more time in retirement than they worked. It is not only fiscally sensible to raise the minimum retirement

age, it is fundamentally fairer to the taxpayers — most of whom will not retire in their 50s.

Opponents of the bill argue that raising the minimum retirement age will make it more difficult to hire new workers. While that is theoretically possible, most 20somethings are not looking hard at the minimum retirement age of the pension system when considering a job. And if they are, they are probably not the kind of employees that the taxpayers want.

The opponents also argue that raising the minimum retirement age would increase government spending because the taxpayers would have to pay an older employee for longer at the higher end of the pay scale instead of being able to replace them with younger, cheaper employees. This argument neglects the fact that the taxpayers also funded the retirement of the outgoing employee. Thus, the taxpayers are on the hook for the current employee, the recent retiree, and perhaps even the retiree who had the job before both of them. No, it is a better deal for the taxpayers to hold onto a seasoned employee for a few years longer and pay them for the value they provide the taxpayers.

Stroebel’s and August’s bill is the smallest of possible tweaks to the WRS to help keep it solvent and fair. Also, since it only applies to new employees, any incoming employee will be able to decide for themselves if it is enough for them to turn down the job. Frankly, the state should go farther by raising the normal retirement age and perhaps indexing it to life expectancy. Or if state Republicans are really interested in longterm reform, they should move to a defined contribution system for new employees.


1115, 28 March 2017



  1. Discussing the WRS | Boots & Sabers - […] be on Wisconsin Public Radio at 0700 to discuss my column regarding tweaking the WRS. I’ll be on for…

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