June 18, 2009

The proposed increase before the state Employee Trust Funds board would start in 2010 and affect about 90 percent of the 263,000 active workers in the state retirement system.

If approved, the base contribution rate would go from 10.4 percent to 11 percent, which is a 5.8 percent increase. Most employers, including the state, cover the entire amount, said Matt Stohr, spokesman for the Department of Employee Trust Funds, which administers the payments.

The state has a fund set aside to pay for contribution rate increases recommended by an actuary, though it's unclear how that will affect the state's $6.6 billion budget shortfall. The governor's budget director did not immediately return a message seeking comment Wednesday.

The budget is scheduled for debate Wednesday in the Senate. It has already been approved by in the Assembly

Contribution rate increases are also being recommended for judges, police and firefighters.

The contribution rate for judges, the governor and state lawmakers would go up 0.4 percentage points to 11.9 percent. The fund covering police would go up 1 percentage point to 14.1 percent and the fund for firefighters would go up 1.4 percentage points to 15.2 percent.

The new contribution rates would be good for a year.

The increases are needed to keep the fund solvent, Stohr said. The recession resulted in a dramatic loss to the state's retirement funds last year. The core retirement fund that all 146,000 retirees participate in lost 26.2 percent in 2008, while the variable fund, which about 25 percent of retirees participate in, lost 39 percent.

Core fund participants had a 2.1 percent pension cut while those in the variable fund lost 42 percent.

The investment board manages money on behalf of the Wisconsin Retirement System, which covers all the retirees and current workers employed by the state, local governments and school districts. Milwaukee city and Milwaukee County have separate pension funds.

Associated Press