MADISON — Retired public employees in Wisconsin will see their monthly pension payments decrease by 9.6 percent starting in May, the Department of Employee Trust Funds announced Friday.
The department warned in December the cut could be as steep as 13 percent.
Pension payments are based on the performance of funds managed by the State of Wisconsin Investment Board, as well as other actuarial factors like the number of retirees entering and leaving the system. The decline is the result of a 26 percent loss in investments in 2008, as payments to retirees invested in the Wisconsin Retirement System's Core Fund are smoothed over a five-year period.
Investments have been increasing every year since 2008, meaning payments to retirees should start to go up again in 2014.
"Another annuity cut is hard for our retirees," said Robert Conlin, ETF board chairman and department secretary. "We know it's not easy, but with 2008 finally behind us, better days should lie ahead."
This year's nearly 10 percent decrease in payments comes after a drop of 7 percent in 2012, 1.2 percent in 2011, 1.3 percent in 2010 and 2.1 percent in 2009. Payments have gone down by more than $4 billion since 2008.
The actual amount of the payouts will vary based on each individual retiree and how close he or she is to the minimum payment set at their time of retirement.
All of the roughly 167,000 people in the system get at least half of their pension in a "Core Fund" annuity. Roughly 40,000 investors have money in the "Variable Fund."
There is no limit on increases or decreases in payments from the variable fund, which is tied directly to performance of the investments and not smoothed. Payments from that fund are increasing 9 percent this year. That comes after an 11 percent increase in 2011.