My column for the Washington County Daily News is online and in print. Here’s a taste, but go pick up a copy!
Pension plans are a relic of the past. They are from a time when it was difficult for regular people to access the investment markets and people living to 80 was unusual. Pension plans have bankrupted some of America’s largest companies and are now impacting governments. That is why only 19 percent of private-sector workers still have a pension while 87 percent of government workers have one.
Thanks to the sound budgetary management of Wisconsin’s politicians of both parties, Wisconsin is not facing an immediate crisis. As of 2016, Wisconsin’s pension obligation is about $93 billion and the Wisconsin Retirement System is about 99 percent funded, leaving a relatively small deficit of $853 million.
It is precisely because Wisconsin is in a fiscal position of strength that we should make changes for the future now. Remember that every pension bomb is the result of people with good intentions making bad decisions. Wisconsin is not immune from the blowback of human nature. Waiting until we are in a crisis before making changes will only lead to poor decisions and bad consequences.
Certainly a big function of Walker’s sound managment the last 8 years.
Much better that awful liberal Venezuela to our South that has not won a Super Bowl since 1985.
WI has been in great shape for years, long before walker got in office. TGT tried to raid the fund and got his fingers slapped.
Did you miss this, “Thanks to the sound budgetary management of Wisconsin’s politicians of both parties”. No surprise.
At some point in time, somebody will write Tommy’s bio and it will NOT be the hagiography he’s trying to write for himself.
If liberals are capable of sound financial decision, what is the liberal problem in IL?
Probably the same problem as in Kansas. Except those folks are rock-ribbed conservatives. Poor decisions and bad management knows no political affiliation.
Liberal states are far worse off on this issue as a whole.
Don’t draw moral equivalency to an ideology that is irresponsible (liberalism) vs responsible (conservativism).
That is dishonest and reprehensible.
You are certainly entitled to your opinion, but the issue was the WI retirement fund. And it is and has been in great shape under both R’s and D’s. You can look it up.
It is doing well despite liberals. That is what you meant to say in face of overwhelming evidence from liberal controlled states with pathetic finances.
It was clear what I said. Why do you have to lie about it?
FYI: It is easy to look up the pension obligations of all 50 states. Takes seconds. Why don’t you do that ? Then apologize.
>FYI: It is easy to look up the pension obligations of all 50 states. Takes seconds. Why don’t you do that ? Then apologize.
As easy as it is to source and quote what you say “you heard the president say about the economy on the ray-de-oh?” You never were able to quote the lies you spread on that one, and you never did apologize for it. Still trolling the big bad Conservatives I see.
LeRoy, it’s also easy to respond properly to this…
But hey, why apologize when its easier to be a coward. Now go run away little child.
Link on the right of this page has a spreadsheet you can download the pension debt and funding for every state.
The Wisconsin Retirement system pension is hybrid a plan, which most states have not followed. It combines the elements of 401K/defined contribution plans and defined benefit plans. Upon retirement, the retiree’s balance is annuitized, based on life expectancy. A “floor” monthly payment is established – going forward it is presumed that there will be a 5% annual market return. If the return exceeds 5%, the retiree gets an increase, if the return is less than 5%, the pension is reduced down, but never below that “floor”. WRS also has a 5 year “smoothing” process – gains and losses are applied over a 5 year period to prevent wild fluctuations in payouts and balances. In 2017 the fund earned 16.2% and the monthly pension was increased 2.4%, because previous years the fund did not earn 5% minimum.
There is also a variable annuity that employees can opt into – that one strictly follows the market. In 2008 that fund lost 39% and the monthly pensions were reduced 42%. In 2013 the fund gained 29% and monthly pensions were increased 25%. The variable fund has no floor – if the market collapses through the floor, so does the pension.
Bottom line, unlike most defined benefit plans, in this one the employees and retirees bear the risk due to low returns.
Here is a table of historical adjustments: http://etf.wi.gov/retirees/dividends.htm
“employees and retirees bear the risk due to low returns.”
Bears some of the risk due to low returns. As you mention, the employee assumes the risk of no increase, but there is a floor in place. If the fund completely collapses, the taxpayers are still on the hook for making good on that pension. Furthermore, if the employee exceeds their life expectancy, the pension fund will still pay them until they die. So the WRS has some variability for which the pensioners see the upside, but are shielded from a hard downturn.