Upcoming Change to WRS Public Employee Plan Contribution Rates

Official Notice (Effective July 1, 2026, Only for the Public Employee Plan) 

Pursuant to House Enrolled Act 41 (2024 HB0083), his notice is to inform WRS stakeholders of an upcoming change to the contribution rates for Wyoming Retirement System (WRS) members and employers. Starting on July 1, 2026, contribution rates will adjust according to the adoption of an actuarially determined contribution (ADC) methodology, which aims to align WRS funding with best practices as assessed by actuarial analysis. This legislatively mandated change will affect both employee and employer contribution rates for the period ending June 30, 2028, with future adjustments scheduled every two years thereafter. Key Details of the Rate Adjustment:

• Effective Date: July 1, 2026, through June 30, 2028.
• Contribution Rate Increases:
  • Employee Contribution Rate: Increase from 9.25% to 9.499%.
  • Employer Contribution Rate: Increase from 9.37% to 9.621%.
• Rate Split
  • Contributions will be shared evenly between employers and employees.
  • Employers may choose to pay all or part of the employee’s portion of the contribution.

These rates reflect the results of the actuarial valuation performed as of January 1, 2025.

• Future Rate Adjustments:
  • Rate adjustments will occur every two years, on July 1st of the even-numbered year (e.g., July 1, 2026, and July 1, 2028).
  • Adjustments will not exceed 50 basis points (0.5%) in any given two-year period.
  • Rates will not be decreased below the normal cost of the system.
  • Rate reductions can only occur if the fund is at least 90% funded.

The actuarially determined contribution (ADC) rate method is essential for ensuring the WRS pension plan stays on track for full funding over the next 25 years. The rates will be reevaluated every two years based on future actuarial valuations, which will consider any changes in plan investments and liabilities.

Additional Background Information

Role of contribution rates:  WRS pension plans are designed to be “pre-funded.”  That means that over the course of a member’s employment, contributions are made to the System and the System invests the money.  The resulting combination of contributions and investment earnings should be sufficient to pay the cost of the pension, with investment earnings paying around 2/3 of that cost.  The investment leverage is extremely helpful to employers, members and taxpayers, but it does rely upon sufficient contributions.

Actuarially Determined Contribution (ADC) rate: Each year, WRS actuaries calculate the contribution rate necessary to pre-fund the system and achieve 100% funding within the timeframe established by the Retirement Board and the Wyoming Legislature.  Historically, Wyoming’s actual contribution rates have lagged the ADC rate.  As a result, progress towards 100% funding has been slower than desired.  WRS is a perpetual system – it isn’t strictly necessary to be at 100% funding in order to secure member benefits.  But a system that is 100% funded generates more investment earnings than a system that is funded at 80%.  To illustrate, consider that a 10% return on $100 dollars is $10 which is more money than a 10% return on $80 ($8).  To achieve maximum efficiency, the System should move towards 100% funding.

2024 Legislation: In 2024, the Wyoming Legislature passed HB0083.  The bill aimed to adjust the contribution rates to what was needed per the ADC calculations, but to do so in modest stages with adequate notice to employer budget processes.  Key attributes and concepts included:

• Measure in the odd numbered year (i.e. 2025)
• Implement in the following even numbered year (i.e. 2026)
• Limit total rate increases to no more than ½ of 1% in any two-year period
• Repeat until the ADC is achieved.

Future Expectations:  Actuaries expected that the first biennial adjustment would need to be a full ½ of 1% (“50 basis points” in investment-speak).  After that, subsequent adjustments might be smaller or not needed at all.  As WRS has measured the system as of January1, 2025, we are 0.67% “off the pace” of the ADC.  We will make a 0.50% adjustment effective July 1, 2026.  The remaining 0.17% will be measured again as of January 1, 2027.  That will inform WRS and stakeholders of what adjustment is necessary as of July 1, 2028.  Right now, we’d say 0.17%, but we will see what happens over the next two years.

Employer and Employee Shares: As with most pensions, WRS pension contributions are shared between the employer and employee.  Employers can opt to subsidize all or part of the employee share, but that is the decision of each employer.  WRS establishes an employer rate and an employee rate.  When the 2024 legislation was considered, the Legislature desired that increases be shared equally between employers and employees. But it was also desired that the burden sharing not deviate from the current burden sharing, which was almost equal, but not quite (9.37% employer and 9.25% employee).  Thus, the final legislation stipulated that adjustments would be split 50.32% employer and 49.68% employee.

Public Employee Plan Only: WRS administers 8 defined benefit pension plans.  The Public Employee (PE) plan is the largest, with about 88% of our members.  HB0083 addressed contribution rates only in the PE plan.  Rates for the other plans continue to be fixed rates, adjusted with individual legislative action.  The Law Enforcement (LE) Plan is in the middle of a three-year legislated program to adjust rates closer to the LE plan’s ADC.  Once that is accomplished, LE might be a candidate to be placed under HB0083’s mechanism if LE rates are still behind their ADC rate.  But that is a topic for another day.