It is estimated that one in every four Wisconsinites is affected either directly or indirectly by the Wisconsin Retirement System.
“The Wisconsin Retirement System is fully funded and is one of only four states in the country to be fully funded,” said Pat Phair, who is an English teacher at Waupaca High School and who on Thursday, March 10, was re-elected to a second, five-year term on the Wisconsin state Teachers Retirement Board.
“Our board is an advisory board to the ETF (Department of Employee Trust Funds), which handles all the money for investment and distribution in the state for people who are working and those who are retired,” he said.
ETF administers the Wisconsin Retirement System under the direction and supervision of the ETF Board.
Phair says the system has been in place for about 50 years.He said the state’s system is a unique one that is often held as a model for other states. It has been successful for decades.
“As a pension, Wisconsin is at or near the top in all the important financial categories,” he said.
The pension program for state public employees has about $80 billion in assets.
“We have 265,000 Wisconsin people in our system, and 156,000 of those are retired people. The others are people like me who are contributing,” Phair said. “We pay out $3.5 billion per year to our retired people or $330 million a month. We’re the largest payroll in Wisconsin. Eighty-five percent of that money, or a little over $3 billion, stays in Wisconsin, meaning the bulk of the retirees still live in the state, and every community in Wisconsin is affected.”
Employees of all municipalities, school districts, state universities and technical colleges are eligible to be in the state’s retirement system. They are eligible whether they are in a union or not.
Phair said teachers make up the largest percentage of those who are in the system.
For those in the system, the average age at which they retire is 59.5 and heading upward, he said. Of those in the system and are retired, their average age is 70.6.
What it means by the fact that the Wisconsin Retirement System is fully funded is that it has enough money on hand to pay all of its retirees until the year 2061.
“Most of the growth is based upon investments,” Phair said. “The ETF has a state of Wisconsin Investment Board which manages the investment side. It does nothing every day but play with the money.”
There are people constantly wanting to make inroads into this system because it is a big pool of money, he said.
“It’s in the spotlight now, because people here and throughout the country think it is taxpayer money when legally, it is not. It is money specifically set aside for retirement by state statute,” Phair said.
Currently, teachers, firefighters, police officers and others who work for cities, counties and the state have to contribute to the retirement system.
“The usual amount is 11.6 percent of their salary. That goes into the retirement system,” he said.
That 11.6 percent amount is to be split between the employer and the employee.
“In the past, teachers and other groups asked and bargained for the employer to pay their half in lieu of no salary increase,” Phair said. “At the time, it seemed like a good deal that sort of became a benefit. It’s been a great benefit, but over the course of time, if the teachers had been required to pay their half, they would have asked for more salary and gotten it.”
In earlier days, it was easier for districts to pay the entire 11.6 percent than to give the teachers more in salary.
Phair said it is public knowledge how much teachers are paid, and in the past, those in the teaching field saw the good retirement system and job security as being part of the benefits.
“Now, the governor is saying each employee must pay the 5.8 percent portion out of their paycheck. The district cannot make that up with an increase that is beyond the cost of living,” he said.
This means that for awhile, teachers will have smaller paychecks.
“From my perspective being on the board, the same amount of money is coming in,” Phair said. “We aren’t concerned about that. Our interest is only to keep the system vital for our retirees.”
He points out that the retirement system allows its retirees to live comfortably. They have disposable income to spend at local restaurants and gift shops, which affects the communities in which they live in a positive way.
“The state is fortunate,” he said. “The retired people are fortunate that we have such a good retirement system in our state.”