Bill will hike state pensions
0:23 AM 1/19/04

at first blush, $108 a year may not seem like much just $9 a month or a couple of bucks each week. <

But, for the 120,000 people in the Wisconsin Retirement System's Fixed Trust Fund, the $108 annual increase in their pension amounts to a victory over a complicated system that would have provided them with no increase in 2004. <

When the Legislature passed Act 11 in 1999, it changed the "smoothing" formula for determining whether dividends would be paid, or essentially, whether increases would occur. Under the previous Transaction Amortization Account, the changes were calculated over a 14-year period. Under the newer Market Recognition Account, the smoothing is more volatile at five years. <

The averaging had little effect on things when the fund was chugging along returning healthy dividends, but things changed when the fund started experiencing losses in 2000. <

The fund lost 0.8 percent in 2000, 2.3 percent in 2001 and 8.8 percent in 2002. The losses resulted in retirees receiving no increase in benefits last year for the first time since 1982 when the Wisconsin Retirement System, the State Teachers Retirement System and the Milwaukee Teachers Retirement System merged. <

The losses were on top of a projected 8 percent increase in the fund. <

With an improved economy and stock market, the Fixed Trust Fund experienced a 24.1 percent increase in 2003, but no benefit increases for retirees in 2004 were planned. <

The averaging or smoothing mechanism for the past five years meant the fund had averaged less than a 2 percent increase. State law requires at least a 2 percent increase before dividends are authorized. <

"We had a lot of people upset because the fund had turned around, but no increase was in their immediate future," said Julie Reneau, the administrator of the Division of Retirement Services at the Department of Employee Trust Funds. <

"The three years of losses prevented us from increasing the benefits," she said. <

Relief is on the way. The Joint Survey Committee on Retirement Systems last week unanimously approved legislation that changes the trigger from 2 percent to 0.5 percent. <

"There would be no problem at all meeting the 0.5 percent requirement," said Pam Henning, director of the department's Office of Strategic Services. "In fact, we were very close to the 2 percent, but .