2015 - 2016 LEGISLATURE
October 13, 2015 - Introduced by Representatives August, Sanfelippo, R. Brooks,
Gannon, Brandtjen, Knodl, Craig, Kremer and Hutton, cosponsored by
Senators Stroebel, LeMahieu and Kapenga. Referred to Committee on State
Affairs and Government Operations. Referred to Joint Survey Committee on
Retirement Systems.
AB398,1,3 1An Act to amend 40.02 (33) (a) 1. and 40.02 (33) (a) 2. of the statutes; relating
determination of final average earnings for the purpose of calculating
3Wisconsin Retirement System annuities.
Analysis by the Legislative Reference Bureau
Under current law, when a participant in the Wisconsin Retirement System
(WRS) terminates covered employment and becomes eligible for an annuity, the
annuity is calculated in one of two ways. The first way is based on the participant's
final average earnings, the participant's number of years of creditable service, and
a percentage multiplier. The final average earnings is a monthly rate of earnings
that is calculated based on the three annual earnings periods in which the
participant's earnings were highest. The second way is to calculate the amount of
a money purchase annuity, which is determined based on the sum of a participant's
accumulated required and additional contributions plus an amount that equals the
participant's accumulated required contributions. The Department of Employee
Trust Funds must pay an annuity based on the method that generates the higher
annuity amount.
This bill revises the methodology of the first way in which a WRS annuity is
calculated by providing that the final average earnings must be based on the five
highest annual earnings periods instead of the three highest annual earnings
periods. Under the bill, this change takes effect on the first day of the 60th month
beginning after publication and applies to participants who terminate WRS covered
employment on or after the first day of the 60th month beginning after publication.

Because this bill relates to public employee retirement or pensions, it may be
referred to the Joint Survey Committee on Retirement Systems for a report to be
printed as an appendix to the bill.
For further information see the state and local fiscal estimate, which will be
printed as an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB398,1 1Section 1. 40.02 (33) (a) 1. of the statutes is amended to read:
AB398,2,72 40.02 (33) (a) 1. The participant's total earnings received or considered to be
3received under sub. (22) (e), (ef), or (em) and for which contributions are made under
4s. 40.05 (1) and (2) during the 3 5 annual earnings periods (excluding any period
5more than 3 5 years prior to the effective date for any participating employer) in
6which the earnings were the highest, subject to federal annual compensation limits;
AB398,2 8Section 2. 40.02 (33) (a) 2. of the statutes is amended to read:
AB398,2,109 40.02 (33) (a) 2. Twelve times the total amount of creditable service for the 3
105 periods.
AB398,3 11Section 3. Initial applicability.
AB398,2,1412 (1) This act first applies to participating employees in the Wisconsin
13Retirement System who terminate covered employment on the effective date of this
AB398,4 15Section 4. Effective date.
AB398,2,1716 (1) This act takes effect on the first day of the 60th month beginning after
AB398,2,1818 (End)