Pension Change Affects 1998-99 QEO Calculation
Beginning January 1, both employers and employees will pay less into
the Wisconsin Retirement System — and that may free up more money
for salary increases.
The Employee Trust Funds Board announced this summer that it was reducing
the required retirement contributions by 0.4% for both employers and employees,
for a total contribution reduction of 0.8%. Statewide, the overall contribution
declines from 12.4% to 11.6% of salary.
The ETF said it was able to reduce the contribution rate because salary
increases have been less than previously projected and investment returns
have been favorable.
The rate reduction applies to “general” employees, which includes
all school employees.
Because of the way a Qualified Economic Offer is calculated, this rate
reduction could mean more money available for salaries.
The QEO law was changed this summer so that any fringe benefit savings
must be applied to salaries beginning in 1998-99. Under most collective
bargaining agreements, the employer pays both the employer and employee
share, meaning the employer will be saving 0.8% in benefit contributions.
Since the employer is saving that 0.8% (0.4% this year since the change
is not effective until January 1), adjustments will need to be made in
negotiated settlements for 1998-99.
UniServ directors are discussing options with the WEAC Collective Bargaining
Division. For more information, contact your UniServ director or WEAC
negotiations specialist Dennis Eisenberg at 1-800-362-8034.
In a related matter, it was reported that an additional 1,876 people
began collecting their WRS pensions July 1. It was the biggest one-month
increase since 1990 when retirees had a special “window of opportunity”
to collect full benefits at an earlier age.
Posted August 26, 1998