wisconsin retirement system

Wisconsin Retirement System2000-2002 Experience StudyGabriel, Roeder, Smith & CompanyDecember 11, 2003

IntroductionEach year the actuarial liabilities of WRS are valued. In the valuation, assumptions are made regarding the future experience of the system with regard to various risk areas

Risk AreasActive membersRates of withdrawalRates of disabilityPatterns of salary increasesRates of retirementRates of mortality

Risk Areas (Continued)Retirees-Rates of mortality - normal-Rates of mortality - disabled lives

Economic-Rates of investment return-InflationStatutes provide for an in-depth study of assumptions every 3 years.

IntroductionAssumptions should be carefully chosen and continually monitored. Continued use of outdated assumptions can lead to ...

IntroductionUnderstated costs resulting in either an inability to pay benefits when due, or sharp increases in required contributions at some point in the future.

IntroductionOverstated costs resulting in either benefit levels that are kept below the level that could be supported by the computed rate, orAn unnecessarily large burden on the current generation of members, employers and taxpayers.

IntroductionA single set of assumptions will not be suitable indefinitely. Things change, and our understanding of things (whether or not they are changing) also changes.

IntroductionIn recognition of this, assumptions are periodically studied in depth. Assumptions are then adjusted to reflect experience trends -- but not random year to year fluctuations.

Basics of an Experience StudyDecrements relate to things that happen to people.Start by counting people (easy, right?).Divide number who actually decremented by number eligible to decrement to get the crude rate.

Basics of an Experience StudyExamine crude rates for consistency with known human behavior patterns, prior observation, etc.Assign a credibility factor to the crude rates based upon the group size and upon whatever external factors may have biased the observations.

Basics of an Experience StudyDevelop trial rates, which are a weighted average of crude rates, and prior assumptions, where the weight is the credibility factor.Smooth the trial rates and test for reasonableness and consistency with WRS data and other known data sources.

Credibility FactorsCredibility factors in this study ranged from under 10% to over 90%Most factors were between 50% and 90%

2000 2002 Experience StudyLarger sample size60% - 90% credibility factor was often applied to the 2000 2002 findingsSmaller sample size-50% - 60% credibility factor was typically applied to the 2000 2002 findingsMore on Credibility

Understanding Impact of Changes

Sheet1

Direction ofDirection of

Change in RateChange in Liability

InterestIncreaseDecrease

Salary IncreaseIncreaseIncrease

MortalityIncreaseDecrease

RetirementEarlier retirementsGenerally Increases

WithdrawalIncreaseDecrease

DisabilityIncreaseGenerally Increases

Summary of Decrement ExperienceWithdrawalGeneralLess than 5 Decreased for Males, Increased for FemalesMore than 5 Approximately sameSchoolsLess than 5 Increased for Public Schools, Decreased for UniversityMore than 5 Approximately same for Public Schools, Decreased for UniversityProtectiveLess than 5 DecreasedMore than 5 Approximately sameExecutive & ElectedLess than 5 IncreasedMore than 5 Decreased

Summary of Decrement ExperienceDisabilityVaries by groupRetirement Normal EarlyGeneral Decreased DecreasedSchools Increased IncreasedProtectiveDecreased N/AExecutive & Elect.Decreased DecreasedMortalityMales DecreasedFemales Approximately the same

Male General ParticipantsComparison of Aggregate Withdrawal Rates

Female General ParticipantsComparison of Aggregate Withdrawal Rates

Chart2

0.08060.089

0.070.0867

0.06630.0761

0.0650.068

0.07220.0714

0.0730.0723

Actual

Proposed

Sheet1

ActualProposed

1985-19870.080.09

1988-19900.070.09

1991-19930.070.08

1994-19960.070.07

1997-19990.070.07

2000-20020.070.07

Sheet1

00

00

00

00

00

00

Actual

Proposed

Male General Withdrawal ExperienceUp to 5 Years of Service at Assumed Termination

Sheet1

Number of WithdrawalsWithdrawal Rates

Years ofLife YearsActualExpectedExpected

ServiceLife Years ExposureExperiencePresentProposedActualPresentProposed

0-114,8062,7072,6062,6650.18280.17600.1800

1-211,6031,1361,2301,1600.09790.10600.1000

2-39,5247227527620.07580.07900.0800

3-47,7284515264640.05840.06800.0600

4-56,3793403833190.05330.06000.0500

Totals50,0405,3565,4975,3700.10700.10990.1073

Male General Withdrawal ExperienceMore than 5 Years of Service at Assumed Termination

>5


Life YearsActualExpectedExpected

AgeExposureExperiencePresentProposedActualPresentProposed

Under 307123343360.04630.06000.0500

30-344,4001451671540.03300.03800.0350

35-399,4792182372180.02300.02500.0230

40-4416,2172963082920.01830.01900.0180

45-4921,4172973433000.01390.01600.0140

50-5423,9213003593110.01250.01500.0130

Totals76,1461,2891,4571,3110.01690.01910.0172

Male General ParticipantsRates of Withdrawal with Less than 5 Years of Service

Chart3

0.18283128460.1759999990.18000000720.006350.00635

0.0979057140.10599999870.10000000150.005520.00552

0.07580848380.07900000360.07999999820.005420.00542

0.05835921330.06800000370.05999999870.005330.00533

0.05329989030.05999999870.05000000070.005630.00563

Actual Experience (+/- 2 SDV)

Present Assumptions

Proposed Assumptions

Years of Service

Sheet2

Withdrawal Experience of

Male General Participants

January 1, 2000 - December 31, 2002

Current table =309Proposed table =311

Less Than 5 Years of Service

At Assumed Termination (Middle of Year)



ServiceExposureExperience (+/- 2 SDV)PresentProposedActualPresentProposedSDV

10-114,8062,7072,6062,6650.18280.17600.18000.0063510.180000

21-211,6031,1361,2301,1600.09790.10600.10000.0055220.100000

32-39,5247227527620.07580.07900.08000.0054230.080000

43-47,7284515264640.05840.06800.06000.0053340.060000

54-56,3793403833190.05330.06000.05000.0056350.050000

Totals50,0405,3565,4975,3700.10700.10990.1073

The present assumptions for service up to 5 years vary by age as well as service.


5 or More Years of Service


Exposure DOES NOT include those eligible for Normal AND EARLY Retirement


Life YearsActualExpectedExpected270.050000

AgeExposureExperience (+/- 2 SDV)PresentProposedActualPresentProposedSDV280.047000

290.044000

27Under 307123343360.04630.06000.05000.01576300.041000

3230-344,4001451671540.03300.03800.03500.00538310.038000

3735-399,4792182372180.02300.02500.02300.00308320.035000

4240-4416,2172963082920.01830.01900.01800.00210330.032600

4745-4921,4172973433000.01390.01600.01400.00160340.030200

5250-5423,9213003593110.01250.01500.01300.00144350.027800

360.025400

Totals76,1461,2891,4571,3110.01690.01910.0172370.023000

380.022000

The proposed assumptions recognize about half of the observed difference between actual experience and390.021000

present assumptions.400.020000

410.019000

420.018000

Rates of Withdrawal with Fewer Than 5 Years of Service430.017200

440.016400

450.015600

460.014800

470.014000

480.138000

490.013600

500.013400

510.013200

520.013000

530.013000

540.013000

550.013000

Rates of Withdrawal with 5 or More Years of Service

ActualProposed

Current0.05270.0529

Previous Investigation Results

1997-19990.05310.0520

1994-19960.04990.0478

1991-19930.04510.0478

1988-19900.04120.0505

1985-19870.04770.0523

Sheet2

0000.006350.00635

0000.005520.00552

0000.005420.00542

0000.005330.00533

0000.005630.00563


Present Assumptions


Years of Service

0000.015760.01576

0000.005380.00538

0000.003080.00308

0000.00210.0021

0000.00160.0016

0000.001440.00144


Present Assumptions


Years of Service

Male General ParticipantsRates of Withdrawal with 5 or More Years of Service

Chart4

0.04634831460.05999999870.05000000070.015760.01576

0.03295454550.03799999880.03500000010.005380.00538

0.02299820660.02500000040.0230.003080.00308

0.01825245110.01899999940.01799999920.00210.0021

0.01386748840.01600000080.01400000040.00160.0016

0.01254128170.01499999970.01300000030.001440.00144


Present Assumptions


Years of Service

Sheet2










10-114,8062,7072,6062,6650.18280.17600.18000.0063510.180000

21-211,6031,1361,2301,1600.09790.10600.10000.0055220.100000

32-39,5247227527620.07580.07900.08000.0054230.080000

43-47,7284515264640.05840.06800.06000.0053340.060000

54-56,3793403833190.05330.06000.05000.0056350.050000

Totals50,0405,3565,4975,3700.10700.10990.1073









290.044000

27Under 307123343360.04630.06000.05000.01576300.041000

3230-344,4001451671540.03300.03800.03500.00538310.038000

3735-399,4792182372180.02300.02500.02300.00308320.035000

4240-4416,2172963082920.01830.01900.01800.00210330.032600

4745-4921,4172973433000.01390.01600.01400.00160340.030200

5250-5423,9213003593110.01250.01500.01300.00144350.027800

360.025400

Totals76,1461,2891,4571,3110.01690.01910.0172370.023000

380.022000



410.019000

420.018000


440.016400

450.015600

460.014800

470.014000

480.138000

490.013600

500.013400

510.013200

520.013000

530.013000

540.013000

550.013000


ActualProposed

Current0.05270.0529


1997-19990.05310.0520

1994-19960.04990.0478

1991-19930.04510.0478

1988-19900.04120.0505

1985-19870.04770.0523

Sheet2

0000.006350.00635

0000.005520.00552

0000.005420.00542

0000.005330.00533

0000.005630.00563


Present Assumptions


Years of Service

0000.015760.01576

0000.005380.00538

0000.003080.00308

0000.00210.0021

0000.00160.0016

0000.001440.00144


Present Assumptions


Years of Service

Female General ParticipantsRates of Withdrawal with Less than 5 Years of Service

Chart2

0.18286200850.16899999980.18000000720.003930.00393

0.1092350230.11100000140.10999999940.003790.00379

0.08839200760.08699999750.09000000360.003920.00392

0.07197585330.07100000230.07000000030.003940.00394

0.0615566530.05999999870.05999999870.004010.00401


Present Assumptions


Years of Service

Sheet1


Female General Participants








10-138,7567,0876,5506,9760.18290.16900.18000.0039310.180000

21-227,1252,9633,0112,9840.10920.11100.11000.0037920.110000

32-321,0201,8581,8291,8920.08840.08700.09000.0039230.090000

43-417,2281,2401,2231,2060.07200.07100.07000.0039440.070000

54-514,3778858638630.06160.06000.06000.0040150.060000

Totals118,50614,03313,47613,9210.11840.11370.1175









290.510000

27Under 301,4287686790.05320.06000.05500.01188300.049000

3230-347,3083394093290.04640.05600.04500.00492310.047000

3735-3914,1024364944230.03090.03500.03000.00292320.045000

4240-4424,0236136976010.02550.02900.02500.00203330.042000

4745-4931,4416698496290.02130.02700.02000.00163340.039000

5250-5433,5356598056710.01970.02400.02000.00152350.036000

360.033000

Totals111,8372,7923,3402,7320.02500.02990.0244370.030000

380.029000



410.026000

420.025000


440.023000

450.022000

460.021000

470.020000

480.020000

490.020000

500.020000

510.020000

520.020000

530.020000

540.020000

550.020000


ActualProposed

Current0.07300.0723


1997-19990.07220.0714

1994-19960.06500.0680

1991-19930.06630.0761

1988-19900.07000.0867

1985-19870.08060.0890

Sheet1

0.18283128460.1759999990.18000000720.006350.00635

0.0979057140.10599999870.10000000150.005520.00552

0.07580848380.07900000360.07999999820.005420.00542

0.05835921330.06800000370.05999999870.005330.00533

0.05329989030.05999999870.05000000070.005630.00563


Present Assumptions


Years of Service

0.04634831460.05999999870.05000000070.015760.01576

0.03295454550.03799999880.03500000010.005380.00538

0.02299820660.02500000040.0230.003080.00308

0.01825245110.01899999940.01799999920.00210.0021

0.01386748840.01600000080.01400000040.00160.0016

0.01254128170.01499999970.01300000030.001440.00144


Present Assumptions


Years of Service

0.18283128460.1759999990.18000000720.006350.00635

0.0979057140.10599999870.10000000150.005520.00552

0.07580848380.07900000360.07999999820.005420.00542

0.05835921330.06800000370.05999999870.005330.00533

0.05329989030.05999999870.05000000070.005630.00563

Actual Experience

Present Assumptions


Years of Service

0.04634831460.05999999870.05000000070.015760.01576

0.03295454550.03799999880.03500000010.005380.00538

0.02299820660.02500000040.0230.003080.00308

0.01825245110.01899999940.01799999920.00210.0021

0.01386748840.01600000080.01400000040.00160.0016

0.01254128170.01499999970.01300000030.001440.00144

Actual Experience

Present Assumptions


Years of Service

0000.003930.00393

0000.003790.00379

0000.003920.00392

0000.003940.00394

0000.004010.00401


Present Assumptions


Years of Service

0000.011880.01188

0000.004920.00492

0000.002920.00292

0000.002030.00203

0000.001630.00163

0000.001520.00152


Present Assumptions


Years of Service

Female General ParticipantsRates of Withdrawal with 5 or More Years of Service

Chart3

0.05322128850.05999999870.05499999970.011880.01188

0.04638752050.05600000170.04500000180.004920.00492

0.03091760030.03500000010.02999999930.002920.00292

0.02551721270.02899999920.02500000040.002030.00203

0.02127794920.02700000070.01999999960.001630.00163

0.01965111080.02400000020.01999999960.001520.00152


Present Assumptions


Years of Service

Sheet1










10-138,7567,0876,5506,9760.18290.16900.18000.0039310.180000

21-227,1252,9633,0112,9840.10920.11100.11000.0037920.110000

32-321,0201,8581,8291,8920.08840.08700.09000.0039230.090000

43-417,2281,2401,2231,2060.07200.07100.07000.0039440.070000

54-514,3778858638630.06160.06000.06000.0040150.060000

Totals118,50614,03313,47613,9210.11840.11370.1175









290.510000

27Under 301,4287686790.05320.06000.05500.01188300.049000

3230-347,3083394093290.04640.05600.04500.00492310.047000

3735-3914,1024364944230.03090.03500.03000.00292320.045000

4240-4424,0236136976010.02550.02900.02500.00203330.042000

4745-4931,4416698496290.02130.02700.02000.00163340.039000

5250-5433,5356598056710.01970.02400.02000.00152350.036000

360.033000

Totals111,8372,7923,3402,7320.02500.02990.0244370.030000

380.029000



410.026000

420.025000


440.023000

450.022000

460.021000

470.020000

480.020000

490.020000

500.020000

510.020000

520.020000

530.020000

540.020000

550.020000


ActualProposed

Current0.07300.0723


1997-19990.07220.0714

1994-19960.06500.0680

1991-19930.06630.0761

1988-19900.07000.0867

1985-19870.08060.0890

Sheet1

0.18283128460.1759999990.18000000720.006350.00635

0.0979057140.10599999870.10000000150.005520.00552

0.07580848380.07900000360.07999999820.005420.00542

0.05835921330.06800000370.05999999870.005330.00533

0.05329989030.05999999870.05000000070.005630.00563


Present Assumptions


Years of Service

0.04634831460.05999999870.05000000070.015760.01576

0.03295454550.03799999880.03500000010.005380.00538

0.02299820660.02500000040.0230.003080.00308

0.01825245110.01899999940.01799999920.00210.0021

0.01386748840.01600000080.01400000040.00160.0016

0.01254128170.01499999970.01300000030.001440.00144


Present Assumptions


Years of Service

0.18283128460.1759999990.18000000720.006350.00635

0.0979057140.10599999870.10000000150.005520.00552

0.07580848380.07900000360.07999999820.005420.00542

0.05835921330.06800000370.05999999870.005330.00533

0.05329989030.05999999870.05000000070.005630.00563

Actual Experience

Present Assumptions


Years of Service

0.04634831460.05999999870.05000000070.015760.01576

0.03295454550.03799999880.03500000010.005380.00538

0.02299820660.02500000040.0230.003080.00308

0.01825245110.01899999940.01799999920.00210.0021

0.01386748840.01600000080.01400000040.00160.0016

0.01254128170.01499999970.01300000030.001440.00144

Actual Experience

Present Assumptions


Years of Service

0000.003930.00393

0000.003790.00379

0000.003920.00392

0000.003940.00394

0000.004010.00401


Present Assumptions


Years of Service

0000.011880.01188

0000.004920.00492

0000.002920.00292

0000.002030.00203

0000.001630.00163

0000.001520.00152


Present Assumptions


Years of Service

Male General ParticipantsRates of Normal Retirement

Chart1

0.27238805970.250.28000000120.03140.0314

0.30129124820.250.28000000120.034760.03476

0.28173913040.250.28000000120.037520.03752

0.28227571120.250.28000000120.042110.04211

0.29310344830.28000000120.30000001190.04880.0488

0.38507462690.46999999880.4000000060.053170.05317

0.41991341990.44999998810.4000000060.064950.06495

0.35156250.44999998810.3499999940.08440.0844

0.30573248410.44999998810.3499999940.036770.03677

0.30653266330.31999999280.3499999940.046220.04622

0.1645569620.28999999170.1500000060.048170.04817

0.12650602410.23999999460.1500000060.05160.0516

0.19047619050.21999999880.1500000060.069960.06996

0.13888888890.11999999730.1500000060.028820.02882


Present Assumptions


Age

Sheet4

Normal Retirement Experience of




Anchor age =55Anchor age =55

LifeNumber of RetirementsRetirement Rates

YearsActualExpectedExpected

AgeExposureExperience (+/- 2 SDV)PresentProposedActualPresentProposedSDV

5757804219201.0225.00.27240.25000.28000.031400.300000

5858697210174.0195.00.30130.25000.28000.034760.300000

5959575162144.0161.00.28170.25000.28000.037520.300000

6060457129114.0128.00.28230.25000.28000.042110.300000

616134810297.0104.00.29310.28000.30000.048800.300000

6262335129157.0134.00.38510.47000.40000.053170.400000

636323197104.092.00.41990.45000.40000.064950.400000

64641284558.045.00.35160.45000.35000.084400.350000

6565628192283.0220.00.30570.45000.35000.036770.220000

6666398122127.0139.00.30650.32000.35000.046220.180000

67672373969.036.00.16460.29000.15000.048170.100000

68681662140.025.00.12650.24000.15000.051600.100000

69691262428.019.00.19050.22000.15000.069960.100000

7070 & Up5768069.086.00.13890.12000.15000.028820.050000

Total5,7061,5711,665.01,609.00.27530.29180.2820

Rates of Normal Retirement

ActualProposed

Current0.27530.2820


1997-19990.26660.2732

1994-19960.32970.2998

Sheet4

0.27238805970.250.28000000120.03140.0314

0.30129124820.250.28000000120.034760.03476

0.28173913040.250.28000000120.037520.03752

0.28227571120.250.28000000120.042110.04211

0.29310344830.28000000120.30000001190.04880.0488

0.38507462690.46999999880.4000000060.053170.05317

0.41991341990.44999998810.4000000060.064950.06495

0.35156250.44999998810.3499999940.08440.0844

0.30573248410.44999998810.3499999940.036770.03677

0.30653266330.31999999280.3499999940.046220.04622

0.1645569620.28999999170.1500000060.048170.04817

0.12650602410.23999999460.1500000060.05160.0516

0.19047619050.21999999880.1500000060.069960.06996

0.13888888890.11999999730.1500000060.028820.02882


Present Assumptions


Age

Sheet1

Early Retirement Experience of








55554,421298309.0354.00.06740.07000.08000.007540.080000

56563,672336184.0294.00.09150.05000.08000.009520.080000

57572,2409490.090.00.04200.04000.04000.008470.040000

58581,95912178.0118.00.06180.04000.06000.010880.060000

59591,72211069.0103.00.06390.04000.06000.011790.060000

60601,46611088.0117.00.07500.06000.08000.013760.080000

61611,23493111.099.00.07540.09000.08000.015030.080000

62621,165232233.0233.00.19910.20000.20000.023400.200000

6363913209183.0183.00.22890.20000.20000.027810.200000

646462494125.094.00.15060.20000.15000.028640.150000

Total19,4161,6971,470.01,685.00.08740.07580.0868

Rates of Early Retirement

ActualProposed

Current0.08740.0868


1997-19990.07550.0773

1994-19960.08760.0876

1991-1993

1988-1990

1985-1987

Sheet1

0.06740556440.07000000030.07999999820.007540.00754

0.0915032680.05000000070.07999999820.009520.00952

0.04196428570.03999999910.03999999910.008470.00847

0.06176620720.03999999910.05999999870.010880.01088

0.06387921020.03999999910.05999999870.011790.01179

0.07503410640.05999999870.07999999820.013760.01376

0.07536466770.09000000360.07999999820.015030.01503

0.19914163090.2000000030.2000000030.02340.0234

0.22891566270.2000000030.2000000030.027810.02781

0.15064102560.2000000030.1500000060.028640.02864


Present Assumptions


Age

Male General ParticipantsRates of Early Retirement

Chart1

0.06740556440.07000000030.07999999820.007540.00754

0.0915032680.05000000070.07999999820.009520.00952

0.04196428570.03999999910.03999999910.008470.00847

0.06176620720.03999999910.05999999870.010880.01088

0.06387921020.03999999910.05999999870.011790.01179

0.07503410640.05999999870.07999999820.013760.01376

0.07536466770.09000000360.07999999820.015030.01503

0.19914163090.2000000030.2000000030.02340.0234

0.22891566270.2000000030.2000000030.027810.02781

0.15064102560.2000000030.1500000060.028640.02864


Present Assumptions


Age

Sheet2





Anchor age =`Anchor age =55




55554,421298309.0354.00.070.070.080.007540.080000

56563,672336184.0294.00.090.050.080.009520.080000

57572,2409490.090.00.040.040.040.008470.040000

58581,95912178.0118.00.060.040.060.010880.060000

59591,72211069.0103.00.060.040.060.011790.060000

60601,46611088.0117.00.080.060.080.013760.080000

61611,23493111.099.00.080.090.080.015030.080000

62621,165232233.0233.00.200.200.200.023400.200000

6363913209183.0183.00.230.200.200.027810.200000

646462494125.094.00.150.200.150.028640.150000

Total19,4161,6971,470.01,685.00.090.080.09


ActualProposed

Current0.08740.0868


1997-19990.07550.0773

1994-19960.08760.0876

1991-1993

1988-1990

1985-1987

Sheet2

0000.007540.00754

0000.009520.00952

0000.008470.00847

0000.010880.01088

0000.011790.01179

0000.013760.01376

0000.015030.01503

0000.02340.0234

0000.027810.02781

0000.028640.02864


Present Assumptions


Age

Female General ParticipantsRates of Normal Retirement

Chart2

0.2015113350.27000001070.27000001070.040260.04026

0.25806451610.27000001070.27000001070.047390.04739

0.22307692310.27000001070.250.051640.05164

0.1950.28000000120.250.056030.05603

0.2650602410.34000000360.250.068510.06851

0.31297709920.50.30000001190.081030.08103

0.33333333330.50.3499999940.092010.09201

0.34177215190.50.3499999940.106730.10673

0.26183206110.50.30000001190.024290.02429

0.26126126130.38999998570.30000001190.029490.02949

0.1514598540.30000001190.2000000030.030630.03063

0.15456674470.250.1500000060.034990.03499

0.14714714710.2000000030.1500000060.038830.03883

0.1586921850.2000000030.1500000060.020640.02064


Present Assumptions


Age

Sheet3

Normal Retirement Experience of








575739780107.0107.00.200.270.270.040260.270000

58583418892.092.00.260.270.270.047390.270000

59592605870.065.00.220.270.250.051640.250000

60602003956.050.00.200.280.250.056030.250000

61611664456.042.00.270.340.250.068510.250000

62621314166.039.00.310.500.300.081030.300000

63631053553.037.00.330.500.350.092010.350000

6464792740.028.00.340.500.350.106730.350000

65651,310343655.0393.00.260.500.300.024290.200000

6666888232346.0266.00.260.390.300.029490.200000

676754883164.0110.00.150.300.200.030630.100000

686842766107.064.00.150.250.150.034990.100000

69693334967.050.00.150.200.150.038830.100000

7070 & Up1,254199251.0188.00.160.200.150.020640.100000

Total6,4391,3842,130.01,531.00.210.330.24

Rates of Normal Retirement

ActualProposed

Current0.21490.2378


1997-19990.26510.3218

1994-19960.28900.3091

Sheet3

0000.040260.04026

0000.047390.04739

0000.051640.05164

0000.056030.05603

0000.068510.06851

0000.081030.08103

0000.092010.09201

0000.106730.10673

0000.024290.02429

0000.029490.02949

0000.030630.03063

0000.034990.03499

0000.038830.03883

0000.020640.02064


Present Assumptions


Age

Female General ParticipantsRates of Early Retirement

Chart3

0.04955465590.05999999870.05999999870.005520.00552

0.05731523380.05999999870.05999999870.006380.00638

0.04775346980.05999999870.05000000070.006540.00654

0.05437531610.05999999870.05000000070.007210.00721

0.0594357710.07000000030.05000000070.007830.00783

0.08635947510.09000000360.07999999820.009810.00981

0.08450197770.10999999940.07999999820.010550.01055

0.17710410850.2000000030.18000000720.015250.01525

0.18631955080.2000000030.18000000720.017590.01759

0.13454800280.2000000030.14000000060.018070.01807


Present Assumptions


Age

Sheet4









55556,175306370.0370.00.050.060.060.005520.060000

56565,304304318.0318.00.060.060.060.006380.060000

57574,251203255.0213.00.050.060.050.006540.050000

58583,954215237.0198.00.050.060.050.007210.050000

59593,651217256.0183.00.060.070.050.007830.050000

60603,277283295.0262.00.090.090.080.009810.080000

61612,781235306.0222.00.080.110.080.010550.080000

62622,507444501.0451.00.180.200.180.015250.180000

63631,959365392.0353.00.190.200.180.017590.180000

64641,427192285.0200.00.130.200.140.018070.140000

Total35,2862,7643,215.02,770.00.080.090.08


ActualProposed

Current0.07830.0785


1997-19990.08790.0924

1994-19960.09520.1026

Sheet4

0.005520.00552

0.006380.00638

0.006540.00654

0.007210.00721

0.007830.00783

0.009810.00981

0.010550.01055

0.015250.01525

0.017590.01759

0.018070.01807


Present Assumptions


Age

General Members - Merit and Longevity Pay Increase AssumptionsGross Salary Increases - Correlation by Age

Chart3

0.075

0.0648

0.0583

0.0548

0.0491

0.0445

0.0409

0.0349

0.0339

Salary Increases

Best Fit Curve

Age

Sheet3

Salary Increases During Calendar 2000 - 2002

To General Members Active Both at Beginning & End of YearData with service >= to this amount will be used

Service Break =1

Expected based on rate at midpoint of age interval

Age GroupAge GroupIndividual expected ending salaries not available for all years.

BeginningBeginning

of YearNumberActualExpectedof Year4.50%sal scale base inflation

231sal scale table

Under 253,1128.22%4.50%Under 2522

2725-2912,5728%5%25-29-0.986608362527$count10.050000

3230-3423,1576%5%30-34322000 General payroll3,717,092,000132,16120.050000

3735-3937,2716%5%35-39372002 General payroll4,316,593,677138,68430.050000

4240-4457,4415%5%40-444240.050000

4745-4966,8005%5%45-494750.050000

5250-5465,3544%5%50-545260.050000

5755-5939,5514%5%55-595770.050000

6260-6417,2463%5%60-646280.050000

6765 & Over6,8823%5%65 & Over6790.050000

100.050000

Total329,386110.050000

120.050000

Average (including new entrants)2.05%4.50%130.050000

140.050000

150.050000

160.050000

170.050000

180.050000

190.050000

200.050000

210.050000

220.050000

230.050000

240.050000

250.050000

260.050000

270.050000

280.046800

290.043600

300.040400

310.037200

320.034000

330.033000

340.032000

350.031000

360.030000

370.029000

380.027200

390.025400

400.023600

410.021800

420.020000

430.019800

440.019600

200220022002200220012001200120012000200020002000450.019400

AgeNumberBeginning PayActual EndingAgeNumberBeginning PayActual EndingAgeNumberBeginning PayActual Ending460.019200

204486722791227220366354116491772030506630558123470.019000

21113226571523761922110319549932121230219717591431940474480.018000

222184632252498408122196400570843241082217532768883568633490.017000

233237465565780515223285618742167090792325552383245875374500.016000

244651144632212208959243989446332103353632437481816119083500510.015000

256601760638918724504255681418829415458025254981216439513571472520.014000

267882172588123138933266791812908219620549266731738374018867713530.012600

278892570396327233412278622413188126261601278082126271222951115540.011200

2810153043060332123166289622718937929443218288692344820425161312550.009800

291141347139943652284229102929730482320171452911313124243734119523560.008400

301179356310893753752330126937703305405181173013203802782341146170570.007000

311454456559464787458831146545056043481854343114394158484044753008580.006200

321626522790205500347932157047864572510902963215024269503945696399590.005400

331735550424025772970933157447561343508835203316354768080451274390600.004600

341756556076455832533534173953652052573387213418945617490260340108610.003800

351941626165026572915635203263719577676563953520696122748865429499620.003000

362236721981637553058136224468923027731309303622566655600271187737630.003000

372463779105308119690337246275485334804356043724837375129978665183640.003000

382689854261748924318238263881558722865382583827838058501486040026650.003000

392857915310879604838039295689209067945940513931629214182998059749660.003000

40319299639635103883637403356102049252107962451403471100327130106863166670.003000

413615113114266117977649413705111972745118875704413694108236406115414501680.003000

423946123511286128591234423891118968530126282224423840113854003121236633690.003000

434095130079258135426191434061125026008132396349434033118682015126211815700.003000

444274137224628142900222444241129876665137341251444027119657110126822669710.003000

454428140635561146070128454198130452850137688495454214126095252133398721720.003000

464377141023041146341271464383136110953144117558464442136420421144252959730.003000

474538147618162152569284474565145991789153759416474310133974719141484037740.003000

484720157232093162452691484397143064020150973785484502140914307149159732750.003000

494548153958907159277513494606150949472159029841494572144094131152450183760.003000

504709161151529166699753504651153542754161321431504269137745619145486929770.003000

514734162876438168185117514336146547573153933272514277139707780147607142780.003000

524404155096597159942375524328148682439156310707524317141778758149307247790.003000

534361156267316160920169534398150896518158634905534201138393175145344194800.003000

544446158809836163456183544246145892673152774450543677120417106126550040810.003000

5540621440001561483418015535281194914331253176205527919058456495041145820.003000

56336711708235012074218956263988080768922970395626278275644286868102830.003000

572500859359068832024257249279981905836069655725207886497182866175840.003000

582337765125177878161158233074411122779391385822646633033969388992

592214720860617403038659210062613413655452225917805326501555729396

601929586753126007705960163950154433523137296015374248104544492723

611487463082444766868661139339334154411188686114164010271941934349

621143329609693373117562110932226479333603246210772970376031060659

638922558128226044059638412293496623558379637701979670520554516

647111940401019771097646641705305617602445646381544729916047474

654761214619012405997654591081476111214562654781122373811680083

663648251861838158466361805839683914196631269456757274241

673227193153728582767271595686661403486723446549704854713

682425071878515707668204382437839872786819933981923561604

691833321383335451969181310212632183646916728354002898038

701612716139277600270146239161724804667014123557822454398

711352205366221303971137214310022312427113219041041975145

721151884587187827372122177052818230787211318043621834833

73101141662714445437310015304991616677738415129471573150

748813671491386153747412923051297336746411349881201027

752564015321406129775237367007237962557522328562262950971

760007600076000

770007700077000

780007800078000

790007900079000

808080

Total11306436571314833792794381Total10945634171926433607569414Total10686632051462993396121210

Sheet3

0

0

0

0

0

0

0

0

0

Salary Increases

Best Fit Curve

Age

General Members - Merit and Longevity Pay Increase AssumptionsGross Salary Increases - Correlation by Service

Chart4

0.0646

0.0498

0.0435

0.0419

0.0403

0.0381

0.0357

0.0335

0.0343

Salary Increases

Best Fit Curve

Age

Sheet3

Salary Increases During Calendar 2000 - 2002

To General Members Active Both at Beginning & End of YearData with service >= to this amount will be used

Service Break =1

Expected based on rate at midpoint of age interval

Service GroupService GroupIndividual expected ending salaries not available for all years.

BeginningBeginning

of YearNumberActualProposedof Year4.50%sal scale base inflation10.035000

111sal scale table20.035000

20-496,5056%5%0-4-0.886442318230.032000

75-973,9145%5%5-97$count40.029000

1210-1458,6304%5%10-14122000 General payroll3,717,092,000132,16150.026000

1715-1939,3224%5%15-19172002 General payroll4,316,593,677138,68460.023000

2220-2433,7944%5%20-242270.020000

2725-2919,0734%5%25-292780.018800

3230-346,9054%5%30-343290.017600

3735-391,0803%5%35-3937100.016400

4240-441633%5%40-4442110.015200

Total329,386Total00.013600

00.013200

00.012800

Average (including new entrants)2.05%4.50%00.012400

00.012000

00.011600

00.011200

00.010800

00.010400

00.010000

00.009600

00.009200

00.008800

00.008840

00.008000

00.007600

00.007200

00.006800

00.006400

00.006000

00.005600

00.005200

00.004800

00.004400

00.004000

00.004000

00.004000

00.004000

00.004000

00.004000

00.004000

00.004000

00.004000

00.004000

00.004000

20022002200220022001200120012001200020002000200000.004000

AgeNumberBeginning PayActual EndingAgeNumberBeginning PayActual EndingAgeNumberBeginning PayActual Ending00.004000

00000000000000.004000

1113062482416012680378631103732191775692418140121991120149582522312602000.004000

28952219654862231969732285862016278312176764272796317410468318816794200.004000

37848203964104214451323370681729186961854424143650114995789516183497300.004000

46433173172482180781705459281518937101613548814563613712545414684600500.004000

55434151491693157801768552331385781321463857785545014188898515093747900.004000

64940139891853145125976650681426856541507542066496513321538114141239800.004000

74767144482263149752383746781350814241421455137498313952316614770096100.004000

84452136773344141443026846841408857121479948938496614460262715278345400.004000

94455142719543147769606946811458669611532637609515815885211516769429600.004000

10438314588234615061424310484915917365016699194610469714578088615330326400.004000

114644160845460165772606114506147328161154698032114005125998259132566479

124325150003947154558402123796127363352133475429123472112547782118352292

133630128685689132975359133325114455341119648611133362109178950115037246

143125113807223117240013143232111579218117044118143279110689751116511943

153114113515224116855132153134112619135117506644153191109587166115392003

1629771124666971157581901630501114194531168241481625178580428990172675

17292311267559511602571717240086174184903057811721867455481878251293

182286868465728901548118205474250836780581221824428567449890219055

19193174571934768065331923278665331390676819192790100878589105641897

2022238691088489591265202628100717814105573921202896106619640111806848

2124981008288431038437872127371062049781111976882125499514503599913873

22257910528459410823544022242395268907997103292220787857387382120400

232319964538939843807123196778104417816288202317616734688470641251

241870782538668025411424166967315308704551672415976236904265389469

251573670871166872701425151362371293650408162516026406315467017602

261427613426906306377526150362876547657385182615296284712965711063

271401614683076314110327142961518632642838102711764962962852005152

28131259175102605954272810684679563348786245288823687951038581165

299604417277645090479297983513829036677571299003749145439386843

307173294126133631240308003491306236491043306502770745929095412

317063209436132702611315662539580226523278315092210860523151239

324712217417822612529324391984678720679597323931622348917014218

333681704440117329036333261413155914690171332921244842413018208

34257114165581159186534215924966296876633419684864428885959

351587158573730800535135607853863650703513655389655797121

3610650750955156764369441858984326671367129301653034589

377232459613287322375121078222187031377231942673334077

3838161843516508313851229909124103553820689132713979

3933157928016290723914490250513132392912716231338034

40124117974224524023102342610725004012449595466608

41167387657511414193636123717404116635102665865

425188857194583428315332327474429338994354639

435218194226359435199203202803435211796223137

4413617637046444176421183659445212361222946

45313628014316445292189917694527680577705

462917699311946277705829684613665136503

472829688269847136503371884726536168436

4813718839094482684366929748000

4926929767211490004915336554755

502101586102706502971941015865014123042439

510005100051000

520005200052000

530005300053000

540005400054000

550005500055000

560005600056000

570005700057000

580005800058000

590005900059000

600006000060000

Total11306436571314833792794381Total10945634171926433607569414Total10686632051462993396121210

Sheet3

Salary Increases

Best Fit Curve

Age

0

0

0

0

0

0

0

0

0

Salary Increases

Best Fit Curve

Age

General Members - Merit and Longevity Pay Increase Assumptions

Save 2

ActualProposed

1985-19870.04770.0523

1988-19900.04120.0505

1991-19930.04510.0478

1994-19960.04990.0478

1997-19990.05310.0520

2000-20020.05270.0529

Male Gen Participants Aggregate

Save 2

0.04770.0523

0.04120.0505

0.04510.0478

0.04990.0478

0.05310.052

0.05270.0529

Actual

Proposed

Sheet1

Service GroupService Group

BeginningBeginning

of YearNumberActualProposedof Year

0-496,5053.96%3.50%0-4

5-973,9141.98%2.00%5-9

10-1458,6301.35%1.40%10-14

15-1939,3221.19%1.20%15-19

20-2433,7941.03%1.00%20-24

25-2919,0730.81%0.80%25-29

30-346,9050.57%0.60%30-34

35-391,0800.35%0.40%35-39

40-441630.43%0.40%40-44

Total329,386Total

SAVE

Previous Investigations:

Male DeathsFemale Deaths

1979-19810.04891979-19810.0273

1982-19840.04301982-19840.0267

1985-19870.03931985-19870.0284

1988-19900.03721988-19900.0295

1991-19930.03651991-19930.0302

1994-19960.03751994-19960.0321

1997-19990.03521997-19990.0330

SAVE

00

00

00

00

00

00

00

Male Deaths

Female Deaths

Summary of Withdrawal Experience

Sheet4

Summary of Decrement Experience


Expected

Decrement Risk AreaActualCurrentProposed

Withdrawal - Total

General (Without Schools)23,47023,77023,334

Public School and University10,42110,68210,442

Protective

With Social Security1,3081,4141,314

Without Social Security939393

Executive and Elected168148159

Withdrawal - Service 5 & Up



Protective

With Social Security400399399



Expected


Disability #

General (Without Schools)583574574

Public School and University315271290

Protective




Expected


Early Retirement




Expected


Normal Retirement

General (Without Schools) **2,6763,4752,866

Public School and University **3,3433,1873,286

Protective*




Expected


Mortality - Retired Lives

Normal Retirement

Male4,6495,1194,805

Female5,2715,1755,175

Disabled Retirement

Male401605487

Female375519429

Mortality - Active Lives

Male483447447

Female374322322

* Includes Early Retirements.

** Figures shown are for people below age 70.

# Actual figures based on Adjusted Experience.

# Actual figures based on Adjusted Experience.Summary of Disability Experience

Sheet4



Expected


Withdrawal - Total



Protective







Protective




Expected


Disability #



Protective




Expected


Early Retirement




Expected


Normal Retirement



Protective*




Expected



Normal Retirement

Male4,6495,1194,805

Female5,2715,1755,175

Disabled Retirement

Male401605487

Female375519429


Male483447447

Female374322322




Summary of Early Retirement Experience

Sheet4



Expected


Withdrawal - Total



Protective







Protective




Expected


Disability #



Protective




Expected


Early Retirement




Expected


Normal Retirement



Protective*




Expected



Normal Retirement

Male4,6495,1194,805

Female5,2715,1755,175

Disabled Retirement

Male401605487

Female375519429


Male483447447

Female374322322




* Includes Early Retirements.** Figures shown are for people below age 70.Summary of Normal Retirement Experience

Sheet4



Expected


Withdrawal - Total



Protective







Protective




Expected


Disability #



Protective




Expected


Early Retirement




Expected


Normal Retirement



Protective*




Expected



Normal Retirement

Male4,6495,1194,805

Female5,2715,1755,175

Disabled Retirement

Male401605487

Female375519429


Male483447447

Female374322322




Summary of Mortality Experience

Sheet4



Expected


Withdrawal - Total



Protective







Protective




Expected


Disability #



Protective




Expected


Early Retirement




Expected


Normal Retirement



Protective*




Expected



Normal Retirement

Male4,6495,1194,805

Female5,2715,1755,175

Disabled Retirement

Male401605487

Female375519429


Male483447447

Female374322322




Male Retired Life Mortality StudyNormal Retirement, Original Annuitants Only

Sheet4

LifePost - Retirement DeathPost - Retirement Death Rates


AgeExposureExperience (+/- 2 SDV)PresentProposedActualPresentProposed

50-542,4646980.00240.00370.0034

55-5918,64878106990.00420.00570.0053

60-6426,3311932362220.00730.00900.0084

65-6928,9134004674380.01380.01610.0152

70-7426,1626647797320.02540.02980.0280

75-7920,2949061,0099470.04460.04970.0467

80-8412,7389841,1031,0350.07720.08660.0813

85-896,2567978588050.12740.13710.1287

90-942,0664744233970.22940.20470.1922

95-993991291161090.32330.29080.2730

100 & Up331813130.54550.40660.3817

Totals144,3044,6495,1194,8050.03220.03550.0333

Female Retired Life Mortality StudyNormal Retirement, Original Annuitants Only

Sheet4

LifePost - Retirement DeathPost - Retirement Death Rates


AgeExposureExperience (+/- 2 SDV)PresentProposedActualPresentProposed

50-548570110.00000.00160.0016

55-5914,4463436360.00240.00250.0025

60-6424,5731321071070.00540.00430.0043

65-6929,2032462172170.00840.00740.0074

70-7428,4824024114110.01410.01440.0144

75-7924,9466647017010.02660.02810.0281

80-8420,3329821,0141,0140.04830.04990.0499

85-8913,2731,2181,1391,1390.09180.08580.0858

90-946,4621,0649509500.16470.14690.1469

95-991,9374384854850.22610.25030.2503

100 & Up297911141140.30640.38230.3823

Totals164,8085,2715,1755,1750.03200.03140.0314

Economic Assumptions

Historical Patterns of Investment Return, Pay Increases and Inflation

Sheet4

Gross Market Returns

CalendarBonds (Long)Cash

YearU.S.Corp.Equiv.Stocks

PeriodTreasury(S&P AA)(T Bills)(S&P 500)

1950-59(0.1)%1.0%1.9%19.4%

1960-691.4%1.7%3.9%7.8%

1970-795.5%6.2%6.3%5.9%

1980-8912.6%13.0%8.9%17.5%

1990-998.8%8.4%4.9%18.2%

200021.5%12.9%5.9%(9.1)%

20013.7%10.7%3.8%(11.9)%

200217.8%16.3%1.7%(22.1)%

Last 53 Years6.0%6.4%5.1%11.8%


Sheet4

Sample Balanced Fund

Equities60%

Bonds - Government20%

- Corporate15%

Cash Equivalents5%

100%

Fund expenses(e)0.50%


Sheet4

CalendarPriceNationalSample Balanced Fund

YearInflationAverageTotalSpread:

Period(CPI)Earnings (NAE)Return (I)I - NAE - e

1950-592.2%4.5%12.2%7.2%

1960-692.5%4.3%5.7%0.9%

1970-797.4%6.9%6.2%(1.2)%

1980-895.1%5.8%15.7%9.4%

1990-992.9%4.2%14.4%9.7%

20003.4%5.5%1.1%(4.9)%

20011.6%2.4%(4.6)%(7.5)%

20022.7%3.0%(7.2)%(10.7)%

Last 53 Years3.9%5.1%9.9%4.3%

Wage InflationThe present assumptions is 4.5%. WRS has averaged 4.1% a year. Longer term national averages are higher due to excess inflation during the 1970s.Recommendation: 4.1%

Real Investment ReturnThe present assumption is 3.5%. Markets have produced net real returns for balanced funds in the 4.3% area since 1960. A larger real return assumption would also be in line with contemporary practice among large public systems.Recommendation: 3.7%

Economic AssumptionsNominal Investment Return is the sum of the inflation base plus the net real return. Current assumption is 8.0%.Recommendation: 7.8%

Hypothetical Valuation Results December 31, 2002

Sheet4

Executive &

GeneralElected

Present Average 2004 Contribution Rate10.80%11.50%

Hypothetical changes in average rates due to:

New decrements0.6-

New decrements with 3.7% spread0.2(0.2)

Protective

With S.S.Without S.S.



New decrements0.60.6

New decrements with 3.7% spread*0.4-

Hypothetical Valuation Results December 31, 2002

Sheet4

Executive &

GeneralElected



New decrements0.6-

New decrements with 3.7% spread*0.2(0.2)

Protective

With S.S.Without S.S.



New decrements0.60.6

New decrements with 3.7% spread0.4-

Implementation ScheduleActive and Inactive Lives Valuation: 12/31/2003

Retired Lives Valuation: 12/31/2003

Option Factors: 10/01/2004

wisconsin retirement system

Documents

rates of mortality

future experience

prior assumptions

experience studygabriel

experience studydecrements

experience trends

outdated assumptions

disabled liveseconomicrates