For the first time in six years, Wisconsin retired public employees were able to reduce their pensions with all their money from the Wisconsin Retirement System (WRS) main trust fund.
The State of Wisconsin Investment Board, which manages the money from the WRS funds, posted preliminary yields for the year 2018 on Friday, and like the stock markets, results were down.
The core fund had a preliminary return of minus 3.3 per cent, with assets of $ 93.6 billion as of December 31, 2018, while the smaller variable fund with assets of $ 7.1 billion had a tentative return of minus seven , 9 percent scored.
This means that the pension payments for most of the 203,000 retirees in the WRS can take a small toll.
"We expect pensioners who participate in the Core Trust Fund to see no change or decrease in Wisconsin retirement payments by 0.5 percent," said Wisconsin Department of Employee Trust Funds spokesman Mark Lamkins.
According to Lamkins, the proportion of those who have money in the variable fund is likely to drop 10 to 14 percent.
Retirees will learn in April how much their individual payments will be for the 12 months from May. The average annual retiree pension for the Wisconsin Retirement System is $ 20,758. If the core fund were reduced by 0.5 percent, the decline for those receiving the median would amount to about $ 103.
The Wisconsin Retirement System has accounts for more than 632,000 current and former public employees. The diversified core fund is used by all retirees and the results are averaged over five years. The voluntary variable fund consists entirely of equities and its results are not smoothed out over a longer period, but adjusted year after year.
Bill Mercer, president of the Wisconsin Retired Educators Association, said he was not surprised that the WRS return was negative.
"Considering that the markets did not develop in the last year, it could have been worse," said Mercer of La Crosse.
The Dow Jones Industrial Average ended the year 2018 5.6 percent from its closing price on December 31, 2017. Standard & Poor's 500 fell 6.2 percent and the Nasdaq Composite 3.9 percent.
Over the past five years, the WRS Core Fund has achieved a preliminary return of 5.2 percent and a 10-year return of 8.8 percent. Income reflects the performance of the securities as well as dividends, distributions and capital gains.
"Despite the temporary challenges of financial markets over the last decade, SWIB's Investment Management delivered returns that lived up to WRS goals, maintained consistent contributions, and maintained WRS 'full capital status," SWIB Director and Chief Investment Officer David Said Villa.
"Our strategy is to provide the core fund with moderate protection against another dramatic downturn while still generating adequate returns," he said.
Only pensioners whose core fund accounts have dividends would see a reduction if such an imposition occurs. The core fund pensions can not be reduced below the level set at retirement.