TRUST PURPOSES AND ADMINISTRATION
Creation and purpose. 40.01(1)(1)
A “public employee trust fund" is created to aid public employees in protecting themselves and their beneficiaries against the financial hardships of old age, disability, death, illness and accident, thereby promoting economy and efficiency in public service by facilitating the attraction and retention of competent employees, by enhancing employee morale, by providing for the orderly and humane departure from service of employees no longer able to perform their duties effectively, by establishing equitable benefit standards throughout public employment, by achieving administrative expense savings and by facilitating transfer of personnel between public employers.
The public employee trust fund is a public trust and shall be managed, administered, invested and otherwise dealt with solely for the purpose of ensuring the fulfillment at the lowest possible cost of the benefit commitments to participants, as set forth in this chapter, and shall not be used for any other purpose. Revenues collected for and balances in the accounts of a specific benefit plan shall be used only for the purposes of that benefit plan, including amounts allocated under s. 40.04 (2)
, and shall not be used for the purposes of any other benefit plan. Each member of the employee trust funds board shall be a trustee of the fund and the fund shall be administered by the department of employee trust funds. All statutes relating to the fund shall be construed liberally in furtherance of the purposes set forth in this section.
Compatibility of trustee responsibilities.
Membership on the employee trust funds board, group insurance board, deferred compensation board, Wisconsin retirement board and the teachers retirement board shall not be incompatible with any other public office. The board members and the employees of the department shall not be deemed to have a conflict of interest in carrying out their responsibilities and duties in administering this chapter, or taking other appropriate actions necessary to achieve the purposes of this chapter, solely by reason of their being eligible for benefits under the benefit plans provided under this chapter. However, any board member or employee of the department is expressly prohibited from participating in decisions directly related to a specific benefit, credit, claim or application of the person and from participating in negotiations or decisions on the selection of actuarial, medical, legal, insurance or other independent contractors if the board member or employee of the department has a direct or indirect financial interest in or is an officer or employee or is otherwise associated with the independent contractor.
Monies appropriated to the Public Employee Trust Fund are not “state funds"; therefore the legislature may not restrict the use of those funds by a statute governing the use of “state or local funds." OAG 1-95
Compliance with federal tax laws. 40.015(1)(1)
The Wisconsin retirement system is established as a governmental plan and as a qualified plan for federal income tax purposes under the Internal Revenue Code and shall be so maintained and administered.
No benefit plan authorized under this chapter may be administered in a manner which violates an Internal Revenue Code provision that authorizes or regulates that benefit plan or which would cause an otherwise tax exempt benefit to become taxable under the Internal Revenue Code.
For the purposes of compliance with the Internal Revenue Code, the plan year is January 1 through December 31.
History: 1995 a. 302
; 2013 a. 20
In this chapter, unless the context requires otherwise:
“Accumulation" means the total employee required contributions or employer required contributions or additional contributions as increased or decreased by application of investment earnings.
“Additional contribution" means any contribution made by or on behalf of a participant to the retirement system other than employee and employer required contributions.
“Alternate payee" means a former spouse or domestic partner of a participant who is named in a qualified domestic relations order as having a right to receive a portion of the benefits of the participant.
“Annual earnings period" means the calendar year except as follows:
For a teacher, it means the period beginning on the first day of a school year and ending on the day prior to the beginning of the next school year, as determined by the employer in accordance with rules of the department.
For a supreme court justice, court of appeals judge or circuit judge who terminates all creditable service on or after May 1, 1992, it means the period beginning on July 1 and ending on the following June 30. This paragraph applies to periods beginning after June 30, 1988.
For an educational support personnel employee who terminates participating employment on or after July 1, 1997, it means the period beginning on July 1 and ending on the following June 30. This paragraph applies to periods beginning after June 30, 1997.
For a technical college educational support personnel employee who terminates participating employment on or after July 1, 1998, it means the period beginning on July 1 and ending on the following June 30. This paragraph applies to periods beginning after June 30, 1998.
For a cooperative educational service agency support personnel employee who terminates participating employment on or after July 1, 1998, it means the period beginning on July 1 and ending on the following June 30. This paragraph applies to periods beginning after June 30, 1998.
“Annuitant" means a person receiving a retirement annuity, beneficiary annuity or a disability annuity from the Wisconsin retirement system, including a person whose disability annuity has been suspended. For group life insurance purposes, “annuitant" also means annuitants of retirement systems other than the Wisconsin retirement system as determined by the group insurance board for any employer.
“Annuity" means a series of monthly payments payable during the life of the annuitant or during a specific period. The first installment of each annuity from the Wisconsin retirement system shall be payable on the first day of the calendar month following the annuity effective date as specified in this chapter and shall be the full monthly amount or, if less, the full monthly amount multiplied by a percentage equal to 3.6 percent times the number of days from the effective date of the annuity to the end of the month in which the annuity is effective, counting both the effective date and the last day of the month. Succeeding installments shall be payable as of the first day of each succeeding calendar month. The last payment shall be the payment payable in the calendar month in which the annuitant dies, except as otherwise specifically provided in this chapter. In the case of the death of an annuitant prior to the expiration of any guaranteed number of payments, if the first installment was less than the full monthly amount, an additional payment shall be paid to the beneficiary, in the month after the end of the guarantee period, equal to the then monthly amount payable times the difference between 100 percent and the percent applied in determining the first monthly installment.
“Assumed benefit rate" means a rate of 5 percent. The assumed benefit rate shall be used for calculating reserve transfers at the time of retirement, making actuarial valuations of annuities in force, determining the amount of lump-sum death benefits payable from the portion of an annuity based on additional deposits and crediting interest to employee required contribution accumulations under s. 40.04 (4) (a) 2.
“Assumed rate" means the probable average effective rate expected to be earned for the core annuity division on a long-term basis. The assumed rate shall be a rate of 8 percent and the actuarial assumption for across-the-board salary increases for the purpose of valuing the liabilities of the Wisconsin Retirement System shall be 3.4 percent less than the assumed rate unless due to changed economic circumstances the actuary recommends and the board approves a different rate. The assumed rate for a calendar year shall be used for all calculations of required contributions and reserves for participants, except as provided in s. 40.04 (4) (a) 2.
, and 2m.
, and the amount of any lump sum benefit paid instead of an annuity, except it shall not be used for any purpose for which the assumed benefit rate is to be used under sub. (6)
The person, or a trust in which the person has a beneficial interest, so designated by a participant or insured employee or annuitant in the last written designation of beneficiary on file with, and in the form approved by, the department at the time of death, except as provided in s. 40.23 (4) (c)
. A written designation of beneficiary for a specified benefit plan applies only for determining beneficiaries under that specified benefit plan.
In the absence of a written designation of beneficiary, or if all designated beneficiaries who survive the decedent die before filing with the department a beneficiary designation applicable to that death benefit or an application for any death benefit payable, the person determined in the following sequence: group 1, surviving spouse or surviving domestic partner; group 2, children of the deceased participant, employee or annuitant, in equal shares, with the share of any deceased child payable to the issue of the child or, if there is no surviving issue of a deceased child, to the other eligible children in this group or, if deceased, their issue; group 3, parent, in equal shares if both survive; group 4, brother and sister in equal shares and the issue of any deceased brother or sister. The shares payable to the issue of a person shall be determined per stirpes. No payment may be made to a person included in any group if there is a living person in any preceding group, and s. 854.04 (6)
shall not apply to a determination under this subsection.
The estate of the participant, employee or annuitant, if there is no written designation of beneficiary and no beneficiary determined under subd. 2.
or par. (b)
or if so specified in the last written designation of beneficiary filed prior to time of death.
“Beneficiary" does not include any of the following:
A person who dies before filing with the department either a beneficiary designation applicable to that death benefit or an application for any death benefit payable to the person except as otherwise provided under group 2, under par. (a) 2.
If a person dies after filing a beneficiary application but before the date on which the benefit check, share draft or other draft is issued or funds are otherwise transferred, any benefit payable shall be paid in accord with the written designation of beneficiary, if any, filed with the department in connection with the application or, if none, in accord with the last designation previously filed by the person, or otherwise to the person's estate.
For purposes of a group life insurance benefit plan under this chapter, and at the discretion of the department, an individual who is notified by the department or insurer that a benefit is payable to the individual because of the death of an insured person, who is provided with any necessary application form, and who does not then apply for the benefit within 12 months of the date of notification by the department that the benefit is payable to the individual.
For the purpose of determining a beneficiary of a deferred compensation plan under par. (a) 2.
, a surviving domestic partner.
“Beneficiary annuity" means any death benefit which is paid as an annuity.
“Benefit plan" includes the Wisconsin retirement system, employee-funded reimbursement account plan, deferred compensation plan, OASDHI, group health insurance, group income continuation insurance, group life insurance or any other insurance plan established under this chapter, regardless of whether each type of insurance is provided through one or multiple contracts or provides different levels of benefits to different employees.
“Board" means the employee trust funds board.
“Child" means natural children and legally adopted children.
“Cooperative educational service agency support personnel employee" means a person who is a cooperative educational service agency employee, but who is not a teacher.
“Core annuity" means any annuity other than a variable annuity.
“Coverage group" has the meaning given that term by federal regulations.
“Craft employee" means a state employee who is a skilled journeyman craftsman, including the skilled journeyman craftsman's apprentices and helpers, but does not include employees who are not in direct line of progression in the craft. Craft employees may be either nonrepresented or in a collective bargaining unit for which a representative is recognized or certified under ch. 111
“Creditable current service" means the creditable service granted for service performed for a participating employer and for which a participating employee receives earnings after the effective date of participation for that employer.
“Creditable military service" means active service in the U.S. armed forces, based on the total period of service in the U.S. armed forces, provided:
The participant enlisted or was ordered or inducted into active service in the U.S. armed forces;
The participant left the employment of a participating employer to enter the U.S. armed forces;
The participant returns to the employment of the employer whose employment the participant left to enter the U.S. armed forces within 180 days of release or discharge from the armed forces, or within 180 days of release from hospitalization because of injury or sickness resulting from service in the armed forces;
The period of service in the U.S. armed forces is not more than 4 years, unless involuntarily extended for a longer period;
The participant was discharged from the U.S. armed forces under conditions other than dishonorable;
The participant upon return from service in the U.S. armed forces furnishes evidence required to establish the participant's rights under this chapter; and
The service in the U.S. maritime service, including the merchant marine, was aboard an oceangoing vessel during the period beginning on December 7, 1941, and ending on August 15, 1945, and the participant submits to the department a copy of a release or discharge certificate or honorable service certificate issued by the U.S. department of defense that verifies the applicant's creditable maritime service.
The creditable military service under par. (a)
shall be in the same employment category, as set forth in s. 40.23 (2m) (e)
, in which the participant was employed immediately prior to entry into the U.S. armed forces.
Notwithstanding sub. (17) (intro.)
and any other law, any person who is credited with 5, 10, 15 or 20 or more years of creditable service, not counting any previously granted creditable military service, may receive creditable military service at the time of retirement for not more than 1, 2, 3 or 4 years, respectively, of active service which meets the standards under par. (a) 5.
This paragraph applies only to active military service served prior to January 1, 1974.
Any creditable military service otherwise granted shall be included in determining the maximum years to be granted under this paragraph.
Creditable military service under this paragraph shall be allocated at the time of retirement in proportion to the amount of the participant's creditable service for each of the employment categories as set forth in s. 40.23 (2m) (e)
, unless a higher benefit would result from the prorated allocation of creditable military service based on the amount of the participant's creditable service for each of the types of creditable service on the date the participant attains the greater of 5, 10, 15 or 20 years of creditable service.
This paragraph does not apply to any active service used for the purpose of establishing entitlement to, or the amount of, any benefit, other than a disability benefit, to be paid by any federal retirement program except OASDHI and the retired pay for nonregular military service program under 10 USC 1331
or, if the participant makes an election under s. 40.30 (2)
, by any retirement system specified in s. 40.30 (2)
other than the Wisconsin retirement system.
The participant's creditable service terminates on or after January 1, 1982.
Contributions, benefits, and service credit with respect to qualified military service, as defined in chapter 43 of title 38 of the United States Code, taken on or after December 12, 1994, are governed by section 414
(u) of the Internal Revenue Code and the federal Uniformed Services Employment and Reemployment Rights Act of 1994.
Effective with deaths occurring on or after January 1, 2007, while a participant is performing qualified military service, as defined in chapter 43 of title 38 of the United States Code, death benefits shall be calculated as though the participant was a participating employee subject to par. (d)
during the period or periods of military service between the date that the participant left participating employment to enter active military service and the date of death.
Effective with disabilities occurring on or after January 1, 2007, if a participant becomes disabled while performing qualified military service, as defined in chapter 43 of title 38 of the United States Code, to the extent permitted by section 414
(u) (8) of the Internal Revenue Code, and is unable to return to participating employment due to the disability incurred while performing such military service, for benefit calculation purposes the participant shall be treated as though the participant was a participating employee subject to par. (d)
during the period or periods of military service between the date that the participant left participating employment to enter active military service and the date of discharge from military service.
Beginning January 1, 2009, an individual receiving differential wage payments while the individual is performing qualified military service, as defined in chapter 43 of title 38 of the United States Code, from an employer shall be treated as employed by that employer, and the differential wage payment shall be treated as compensation for purposes of applying the limits on annual additions under section 415
(c) of the Internal Revenue Code. This provision shall be applied to all similarly situated individuals in a reasonably equivalent manner.
“Creditable prior service" means all previous service for a participating employer of a person who became a participating employee on the effective date of participation for that employer if the service or employment conformed to the requirements for granting creditable current service, but no credit shall be granted for any period of service which was previously covered by a retirement system.
“Creditable service" means the creditable current and prior service, expressed in years and fractions of a year to the nearest one-hundredth, for which a participating employee receives or is considered to receive earnings under sub. (22) (e)
, or (em)
and for which contributions have been made as required by s. 40.05 (1)
and creditable military service, service credited under s. 40.285 (2) (b)
and service credited under s. 40.29
, expressed in years and fractions of years to the nearest one-hundredth. How much service in any annual earnings period is the full-time equivalent of one year of creditable service shall be determined by rule by the department and the rules may provide for differing equivalents for different types of employment. Except as provided under s. 40.285 (2) (e)
, the amount of creditable service for periods prior to January 1, 1982, shall be the amount for which the participant was eligible under the applicable laws and rules in effect prior to January 1, 1982. No more than one year of creditable service shall be granted for any annual earnings period. Creditable service is determined in the following manner for the following persons:
Each person holding the offices of governor, lieutenant governor, secretary of state, state treasurer, representative to the assembly, senator, chief clerk and sergeant at arms of the assembly and chief clerk and sergeant at arms of the senate shall receive creditable service on a full-time basis for the period during which the office is held.
Notwithstanding s. 40.19 (3)
, upon application to the department each participant who has been a protective occupation participant after July 1, 1969, if the participant has been employed as a protective occupation participant for the 12 months immediately preceding retirement, shall be granted creditable service as a protective occupation participant for all service prior to July 1, 1969, which was performed in a position designated under sub. (48)
as a position in which an individual would be a protective occupation participant.
Any benefits authorized under subd. 1.
for any person who terminated as a participating employee prior to April 27, 1982, which are in excess of the amounts otherwise payable to the person under other provisions of this chapter, shall be paid from the appropriation under s. 20.515 (1) (a)
Notwithstanding any other law or rule, any participating employee whose service includes Wisconsin teaching service performed before July 1, 1966, for which required contributions were made under the applicable statutes and rules of the former state teachers retirement system and for which the number of days of teaching service in a fiscal year was fewer than 120, shall receive creditable service for that service in an amount equal to the total number of teaching days credited during the fiscal year divided by 165 days.
Any assistant district attorney in a county having a population of 750,000 or more who did not have vested benefit rights under the retirement system established under chapter 201, laws of 1937
, who became a participating employee on January 1, 1990, and who is a participating employee on October 29, 1999, shall receive creditable service for the total period of his or her service under the retirement system established under chapter 201, laws of 1937
Notwithstanding par. (d)
, each participant who is a state motor vehicle inspector hired before January 1, 1968, shall be granted creditable service as a protective occupation participant for all covered service as a state motor vehicle inspector that was earned before, on or after May 1, 1990. Notwithstanding par. (d)
, each participant who is a state motor vehicle inspector hired on or after January 1, 1968, shall be granted creditable service as a protective occupation participant for all covered service as a state motor vehicle inspector that was earned on or after May 1, 1990, but may not be granted creditable service as a protective occupation participant for any covered service as a state motor vehicle inspector that was earned before May 1, 1990.
Notwithstanding par. (d)
, each participant who is a state probation and parole officer on or after January 1, 1999, shall be granted creditable service as a protective occupation participant for all covered service as a state probation and parole officer that was earned on or after January 1, 1999, but may not be granted creditable service as a protective occupation participant for any covered service as a state probation and parole officer that was earned before January 1, 1999, unless that service was earned while the participant was classified under sub. (48) (a)
and s. 40.06 (1) (d)
as a protective occupation participant.
“Death benefit" means any amount payable to a beneficiary under s. 40.73
“Decree date" means the first day of the month in which a participant's marriage is terminated by a court under a final judgment, decree or order.
“Deferred compensation plan" means a plan which is in accordance with section 457
of the Internal Revenue Code, under which an employer executes an agreement by which an employee voluntarily agrees to defer a part of gross compensation for payment at a later date. Deferred compensation plan does not include annuity plans specified under section 403
(b) of the Internal Revenue Code.
“Deferred compensation plan provider" means a person who provides administrative or investment services related to deferred compensation plans.
“Department" means the department of employee trust funds.
“Dependent" means the spouse, domestic partner, minor child, including stepchildren of the current marriage or domestic partnership dependent on the employee for support and maintenance, or child of any age, including stepchildren of the current marriage or domestic partnership, if handicapped to an extent requiring continued dependence. For group insurance purposes only, the department may promulgate rules with a different definition of “dependent" than the one otherwise provided in this subsection for each group insurance plan.
“Differential wage payment" means any payment, including specifically a payment under s. 230.315
, that satisfies all of the following:
The payment is made by an employer to a participating employee with respect to any period during which the participating employee is performing service in the uniformed services, as defined in 38 USC 4303
, while on active duty for a period of more than 30 days.
The payment represents all or part of the earnings the participating employee would have received from the employer if the participating employee were performing services for the employer.
“Disability annuity" means any annuity payable under s. 66.191
, 1981 stats., or s. 40.63
“Domestic partner" means an individual in a domestic partnership.
“Domestic partnership" means a relationship between 2 individuals, who submitted an affidavit of domestic partnership to the department before September 23, 2017, that satisfies all of the following:
Each individual is at least 18 years old and otherwise competent to enter into a contract.