MADISON — The minimum retirement age for public employees would increase by two years under a bill proposed by a state lawmaker who said the change would reflect increasing life spans and later retirement ages in general while possibly strengthening the pension system.
Democrats and a prominent retiree group were skeptical, and the state Department of Employee Trust Funds said a thorough actuarial study was needed to make sure the change wouldn’t cause unintended problems.
Most municipal workers, state employees and teachers in the Wisconsin Retirement System must work until they are 65 years old to collect full benefits, but they can retire at age 55 with reduced pensions.
Under a bill circulated by Rep. Duey Stroebel, R-Saukville, the minimum age would rise to 57. For police and firefighters, it would increase two years to 52.
“(Current laws) have been in place for many years and have not changed to reflect increased longevity, normal life work span or the changing demographics of our state,” Stroebel said Friday in an email sent to state legislators in an effort to find co-sponsors.
Stroebel’s bill would affect only people who are younger than 40, so nobody would be affected for more than a decade.
The average retirement age is 60.
The pension system has been lauded by the Pew Center on the States and others who ranked the system as the best in the nation because it is fully funded.
“He wants to address a problem that doesn’t exist,” said Jim Palmer, president of a group representing pension system members.
But Stroebel pointed to a 2012 memorandum in which ETF staff told him that while early retirees receive reduced pensions, state law doesn’t reduce them enough to completely cover costs.
“The system does take a hit every time there is an early retirement,” Stroebel, who is co-chairman of the Legislature’s Joint Survey Committee on Retirement Systems, said in an interview. “We value our trust fund greatly, and we value its solvency.”
The ETF memo also emphasized an actuarial study was needed to know how the change would affect the complex retirement system.
For example, adjusting the retirement age could increase costs for taxpayers because experienced workers would stay on the payroll longer. Or it could mean injured or ill employees would continue working, leading to higher costs in disability claims, especially among police and firefighters.
“(It also) could degrade the overall policy aim of maintaining public safety at a high level,” the department memo said.
Terese Berceau, a Madison Democrat on the retirement committee, said she was wary of reducing flexibility for workers deciding when to retire.
“People do age differently,” Berceau said. “There are some people who don’t age well, and they may have great difficulty working longer.”
The system serves 570,000 employees and retirees. Benefits average about $23,000 a year. They are calculated based on years worked, salary and fund investment income.
About 75 percent of costs are paid by investment proceeds, with the rest coming from contributions made by government employers and employees.