40.01(2)
(2) Purpose. 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. 20.515 (1) (um) or
(ut) or
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.
40.01(3)
(3) 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.
40.01 Annotation
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.
40.015
40.015
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.
40.015(2)
(2) 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.
40.015 History
History: 1995 a. 302.
40.02
40.02
Definitions. In this chapter, unless the context requires otherwise:
40.02(1)
(1) "Accumulation" means the total employee required contributions or employer required contributions or additional contributions as increased or decreased by application of investment earnings.
40.02(2)
(2) "Additional contribution" means any contribution made by or on behalf of a participant to the retirement system other than employee and employer required contributions.
40.02(2m)
(2m) "Alternate payee" means a former spouse 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.
40.02(3)
(3) "Annual earnings period" means the calendar year except as follows:
40.02(3)(a)
(a) 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.
40.02(3)(b)
(b) 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.
40.02(3)(c)
(c) 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.
40.02(3)(d)
(d) 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.
40.02(3)(e)
(e) 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.
40.02(4)
(4) "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.
40.02(5)
(5) "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% 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% and the percent applied in determining the first monthly installment.
40.02(6)
(6) "Assumed benefit rate" means a rate of 5%. 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.
40.02(7)
(7) "Assumed rate" means the probable average effective rate expected to be earned for the fixed annuity division on a long-term basis. The assumed rate shall be a rate of 8% 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% 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.,
2g. 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).
40.02(8)(a)1.
1. 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.
40.02(8)(a)2.
2. In the absence of a written designation of beneficiary, or if all beneficiaries so designated die before filing with the department an application for any death benefit payable, the person determined in the following sequence: group 1, widow or widower; group 2, children if at least one child survives the participant, employee or annuitant, in which event the share of any deceased child shall be payable to the surviving spouse of the child or to the surviving children of the child if there is no spouse, or otherwise to the other eligible children in this group; group 3, grandchild; group 4, parent; group 5, brother and sister. No payment may be made to a person included in any group if there is a living person in any preceding group.
40.02(8)(a)3.
3. 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.
40.02(8)(b)
(b) "Beneficiary" does not include 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.
40.02(9)
(9) "Beneficiary annuity" means any death benefit which is paid as an annuity.
40.02(10)
(10) "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.
40.02(11)
(11) "Board" means the employee trust funds board.
40.02(12)
(12) "Child" means natural children and legally adopted children.
40.02(12m)
(12m) "Cooperative educational service agency support personnel employee" means a person who is a cooperative educational service agency employee, but who is not a teacher.
40.02(13)
(13) "Coverage group" has the meaning given that term by federal regulations.
40.02(14)
(14) "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.
40.02(15)(a)(a) "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:
40.02(15)(a)1.
1. The participant enlisted or was ordered or inducted into active service in the U.S. armed forces;
40.02(15)(a)2.
2. The participant left the employment of a participating employer to enter the U.S. armed forces;
40.02(15)(a)3.
3. 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;
40.02(15)(a)4.
4. The period of service in the U.S. armed forces is not more than 4 years, unless involuntarily extended for a longer period;
40.02(15)(a)5.
5. The participant was discharged from the U.S. armed forces under conditions other than dishonorable;
40.02(15)(a)6.
6. 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
40.02(15)(a)7.
7. 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.
40.02(15)(b)
(b) The creditable military service under
par. (a) shall be the same type, as set forth in
s. 40.23 (2m) (e), as the participant was receiving prior to entry into the U.S. armed forces.
40.02(15)(c)
(c) 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., provided:
40.02(15)(c)1.
1. This paragraph applies only to active military service served prior to January 1, 1974.
40.02(15)(c)2.
2. Any creditable military service otherwise granted shall be included in determining the maximum years to be granted under this paragraph.
40.02(15)(c)3.
3. 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 types of creditable service set forth in
s. 40.23 (2m) (e) on the date the participant attains 5, 10, 15 or 20 years of creditable service.
40.02(15)(c)4.
4. 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 to
1337 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.
40.02(15)(c)5.
5. The participant's creditable service terminates on or after January 1, 1982.
40.02(16)
(16) "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.
40.02(17)
(17) "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
(2) and creditable military service, service credited under
s. 40.25 (7) 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
pars. (i) and
(k), 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:
40.02(17)(a)
(a) 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.
40.02(17)(b)
(b) Each participating employee in the Wisconsin retirement system whose creditable service terminates on or after January 1, 1982, who was previously a participant in the Wisconsin retirement fund and who has not received a separation benefit may receive creditable service equal to the period of service during any qualifying period under s.
41.02 (6) (c), 1969 stats., s.
66.901 (4) (d), 1967 stats., or under any predecessor statute, but not to exceed 6 months. The additional creditable service shall be granted upon application by the employee if the applicant pays to the department a lump sum payment equal to 5% of one-twelfth of the employee's highest earnings in a single annual earnings period multiplied by the number of months of creditable service granted under this paragraph. That amount shall be credited and treated as an employee required contribution for all purposes of the Wisconsin retirement system.
40.02(17)(d)1.1. 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.
40.02(17)(d)2.
2. 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).
40.02(17)(e)
(e) Each executive participating employee whose creditable service terminates on or after May 3, 1988, and each participating employee who is a present or former elected official or an appointee of a present or former elected official and who did not receive creditable service under s.
40.02 (17) (e), 1987 stats., or s.
40.02 (17) (e), 1989 stats., and whose creditable service terminates on or after August 15, 1991, who was previously in the position of the president of the University of Wisconsin System or in a position designated under
s. 20.923 (4),
(8) or
(9), but did not receive creditable service because of age restrictions, may receive creditable service equal to the period of executive service not credited if the participant pays to the department a lump sum payment equal to 5.5% of one-twelfth of the employee's highest earnings in a single annual earnings period multiplied by the number of months of creditable service granted under this paragraph. That amount shall be credited and treated as an employee required contribution for all purposes of the Wisconsin retirement system.
40.02(17)(f)
(f) 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.
40.02(17)(gm)
(gm) Any assistant district attorney in a county having a population of 500,000 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.
40.02(17)(h)
(h) 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.
40.02(17)(i)
(i) Each participating employee in the Wisconsin retirement system whose creditable service terminates on or after April 25, 1990, and whose earnings include compensation for teacher improvement leave granted by the board of regents of Wisconsin state colleges during the period beginning on January 1, 1964, and ending on August 31, 1967, in a written and satisfied contract, may receive creditable service for the period for which those earnings were received in an amount not to exceed one year if all of the following apply:
40.02(17)(i)1.
1. The participant meets the requirements of this paragraph and submits an application to the board of regents of the University of Wisconsin System.
40.02(17)(i)2.
2. The board of regents of the University of Wisconsin System certifies the creditable service requested under
subd. 1.
40.02(17)(i)3.
3. The participant pays to the department a lump sum equal to 5% of one-twelfth of the employee's highest earnings in a single annual earnings period multiplied by the number of months of creditable service that is granted under this paragraph. That amount shall be credited and treated as employee required contributions for all purposes of the Wisconsin retirement system. No employer may pay any amount payable under this subdivision on behalf of any participating employee.
40.02(17)(k)
(k) Each participating employee whose creditable service terminates on or after May 11, 1990, and who submits to the department proof that the participant performed service in this state as a junior teacher, as defined in s.
42.20 (6), 1955 stats., that was not credited under s.
42.40, 1955 stats., shall receive creditable service for the period for which that service was performed, even if the participant did not become a member of the state teachers retirement system after performing that service, if the participant pays to the department a lump sum equal to 5% of one-twelfth of the employee's highest earnings in a single annual earnings period multiplied by the number of months of creditable service that is granted under this paragraph. That amount shall be credited and treated as employee required contributions for all purposes of the Wisconsin retirement system. No employer may pay any amount payable under this paragraph on behalf of any participating employee.
40.02(17)(m)
(m) 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.
40.02(18)
(18) "Death benefit" means any amount payable to a beneficiary under
s. 40.73.
40.02(18f)
(18f) "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.
40.02(18g)
(18g) "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.
40.02(18s)
(18s) "Deferred compensation plan provider" means a person who provides administrative or investment services related to deferred compensation plans.
40.02(19)
(19) "Department" means the department of employee trust funds.
40.02(20)
(20) "Dependent" means the spouse, minor child, including stepchildren of the current marriage dependent on the employee for support and maintenance, or child of any age, including stepchildren of the current marriage, 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.
40.02(21)
(21) "Disability annuity" means any annuity payable under s.
66.191, 1981 stats., or
s. 40.63.
40.02(22)(a)
(a) Except as provided in
pars. (b) to
(f) and
s. 40.63 (1) (c), means the gross amount paid to an employee by a participating employer as salary or wages, including amounts provided through deferred compensation or tax shelter agreements, for personal services rendered to or for an employer, or which would have been available for payment to the employee except for the employee's election that part or all of the amount be used for other purposes and also includes the money value, as determined by the employer, of any board, lodging, fuel, laundry and other allowances provided for the employee in lieu of money. For purposes of this paragraph, the gross amount shall be determined prior to deductions for taxes, insurance premiums, retirement contributions or deposits, charitable contributions or similar amounts and shall be considered received as of the date when the earnings would normally be payable by the employer. For reporting and computation purposes, fractions of a dollar shall be disregarded in determining annual earnings.
40.02(22)(b)
(b) Does not mean payments made for reasons other than for personal services rendered to or for an employer, including, but not limited to:
40.02(22)(b)2.
2. Employer contributions for insurance and retirement.
40.02(22)(b)4.
4. Payments contingent on the employee providing the employer with or assisting the employer in acquiring tangible or intangible property of the employee.
40.02(22)(b)5.
5. Payments contingent on the employee having attained an age which, if increased by 5 years, is greater than what the employee's age would be on the employee's normal retirement date.
40.02(22)(b)6.
6. Lump sum payments at termination for accumulated vacation, sick leave or compensatory time, except that for disability purposes any lump sum payments shall be treated as a continuation of the employee's earnings and service at the employee's then current rate of pay. This subdivision does not exclude payments which are broadly applicable to the employees of the employer regardless of age, length of service or likelihood of employment termination.
40.02(22)(b)7.
7. Payments contingent on the employee having terminated covered employment or having died.
40.02(22)(b)8.
8. Payments contingent on the employee terminating employment at a specified time in the future including payments to secure voluntary release of an unexpired contract of employment.
40.02(22)(b)9.
9. Payments for damages, attorney fees, interest or penalties paid under court judgment or by compromise settlement to satisfy a grievance or wage claim even though the amount of damages or penalties might be based on previous salary levels. However, the department may by rule provide that a payment of additional wages to a continuously participating employee, or the payment of salary to a participant for any period of improper termination of participating employment, is earnings, if the payment is treated by the employer and employee as taxable income and is consistent with previous payment for hours of service rendered by the employee.
40.02(22)(b)10.
10. Payments made in the last 5 years of employment which are the result of a change in the method of computing the base compensation of an employee, unless the change in method for computing the base compensation is a permanent change and is broadly applicable to the employees of that employer or unless the change is the result of a significant change in the nature of the duties and activities expected of the employee.
40.02(22)(b)11.
11. Payment in lieu of fringe benefits normally paid for or provided by the employer but which can be paid to the employee at the employee's option.
