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SWIB reports flat returns for state trust funds

SWIB reports flat returns for state trust funds


Like the U.S. stock market as a whole, the main trust fund for the Wisconsin Retirement System ended 2015 flat, according to preliminary returns announced Wednesday by the State of Wisconsin Investment Board.

But most retirees probably won’t face a reduction in their pension checks based on the Core Fund results, state officials said.

The retirement system’s Core Fund had a preliminary return of minus-0.4 percent for the year. The diversified fund had a preliminary market value of $85.3 billion on Dec. 31, 2015.

The Variable Fund, an optional, all-stock fund, had a preliminary return of minus-1.2 percent with a preliminary Dec. 31 market value of $6.7 billion.

“This is not a market for the weak of heart,” Michael Williamson, executive director of the investment board, which manages the funds, said in a written statement.

Gains or losses in the Wisconsin Retirement System’s Core Fund are smoothed over a five-year period. So, because of investment gains in prior years, public employee retirees are not expected to see a drop in their pension amounts from the Core Fund, the Department of Employee Trust Funds is projecting. Actual adjustments won’t be determined until March after an actuarial analysis is done.

For the five-year period, the Core Fund had preliminary returns of 6.7 percent. The Variable Fund does not consider an average of several years but adjusts for each year’s returns individually.

Nationwide, the stock market had a volatile year. The Dow Jones Industrial Average ended down 2.2 percent, its first down year since 2008, while the Standard and Poor’s 500 Index closed down 0.7 percent, or, if dividends are included, up 1.38 percent. The Nasdaq market rose 5.7 percent.

“Many economists believe we are in a ‘low return environment,’” Williamson said. “We cannot control the market, but we can manage risks and costs.”

This is the first year since 2008 that the Core Fund results are on the negative side. The Variable Fund has ended down in two of the past seven years.

The $92 billion in the Wisconsin Retirement System provides benefits to more than 588,000 current or former public employees and is the ninth-largest U.S. public pension fund.

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