Two Republican lawmakers are proposing to raise the retirement age from 55 to 60 for most new public workers and change the way pension payments are calculated to ensure the future solvency of the state’s pension system.
The coming bill, authored by Sen. Duey Stroebel, R-Saukville, and Assembly Speaker Pro Tem Tyler August, R-Lake Geneva, is a revision of proposals Stroebel championed last legislative session that never got a hearing. The bills would have made similar changes to the state pension system for existing state employees, reducing their monthly pension payouts.
“A pension system is only as stable as a government’s ability to fund it,” said a memo written by Stroebel and August seeking co-sponsorship, adding that the bill would protect the Wisconsin Retirement System’s solvency and taxpayers by changing benefits for new hires to “bend the cost curve down” on a pension system that is generally considered one of the best in the country.
Currently, WRS uses a complex formula that includes years of service and the average of the highest three years of earnings to determine payouts.
Under the bill, payments would be determined by averaging workers’ top five years of pay instead of the top three. Stroebel has said the result of averaging the top five years of income will be more representative of workers’ salaries. Also under the bill, the minimum age at which a new worker could retire would be 60 instead of 55. Public safety workers could retire at 52 instead of 50. Government pension contributions would be $59 million lower if the measures were in place today, according to the co-sponsorship memo released this week.
Public employees can retire at age 65 and get full pension benefits, but they may opt to retire earlier and get reduced payments. The system covers 605,049 active employees, retirees and former employees with deferred benefits and paid out $4.9 billion in 2016, according to the state Department of Employee Trust Funds, which oversees WRS.
As of Dec. 31, 2015, the $92 billion system was 99.97 percent funded and its unfunded liability was $24.1 million, according to the department.