SWIB Reports 5-Year Performance Adds $4.1 Billion Above Benchmarks, Awards Incentive Compensation

State of Wisconsin Investment Board (SWIB) Trustees awarded incentive compensation based on more than $4.1 billion of net outperformance generated by SWIB staff over the last five years for the fully funded Wisconsin Retirement System (WRS). Due to SWIB’s strong investment performance, WRS retirees will see a Core Trust Fund annuity adjustment of 2.3% and Variable Trust Fund annuity adjustment of 15%.

In recognition of staff outperformance, the Trustees awarded incentive compensation payments totaling approximately $36 million. Cost-effective internal management that generated strong investment returns has helped the WRS remain among the best-funded public pension plans in the country. Over the last 20 years, SWIB’s active management and its diversified holdings generated $15 billion for the Core Trust Fund above what it would have earned by simply investing in a passive portfolio consisting of 60% global equities and 40% domestic bonds.

In 2024, the Core Fund, the larger of the two WRS trust funds with more than $128 billion in assets, ended the year with a one-year net return of 8.5% and a five-year net return of 7.2%. Fifteen of seventeen active investment strategies outperformed their benchmarks contributing to a 1-year excess return of 1.1% (the most since 2009) and a 5-year excess return of 0.7%.  The Core Fund’s 10-year and 20-year returns, net of external manager fees, continue to exceed its target return of 6.8% with SWIB outperforming the Core Fund benchmark for these periods as well.

The returns generated by SWIB also help provide continued stability in employer and employee contribution rates. WRS retirees have seen positive annuity adjustments in nine of the last 10 years, and contribution rates have hovered between 6.5% and 6.9% over that same period. This highlights not only the thoughtful design of the WRS, but also the efforts of SWIB staff to protect participants from large swings in annuities and contributions.

“The WRS trust funds delivered another strong performance year, driven by an investment strategy designed to withstand financial challenges and provide participants with the retirement security they deserve,” said SWIB Executive Director/Chief Investment Officer Edwin Denson. “No matter what the future holds, I am confident the WRS will remain among the nation’s most resilient pension funds —growing and protecting participants’ benefits, giving them peace of mind to focus on their work, life, and future.”

“I am incredibly proud of the work SWIB staff does on behalf of over 692,000 WRS participants. This year’s results reaffirm the value of highly skilled employees executing a sophisticated investment program,” SWIB Board of Trustees Chair Clyde Tinnen said. “Our pay-for-performance approach enables us to attract and retain top in-house talent to pursue significant internal management and implement a broad range of active strategies — generating billions in added value for participants.”

Incentive compensation, the pay-for-performance part of employee compensation, was awarded to 256 employees and is based on an employee’s contributions to the overall success of the organization and trust fund performance after deduction of all costs. After all costs, the WRS has retained over 96% of excess value added over the last five-years. Incentives are based on delivering value above industry benchmarks set by the Trustees with the advice of an outside independent consultant, a practice used throughout the industry. The plan sets total compensation targets using peer group data and primarily focuses on five-year returns, a longer-term measure that aligns with SWIB’s long-term investment strategy and the period used to calculate annuity adjustments. Compensation to SWIB employees provides a considerable cost savings advantage for the WRS over the fees charged by external investment managers.

SWIB Trustees also granted long-term incentive units to senior employees, who constitute less than one-third of staff, that will be eligible for payment in 2028. Long-term incentives are a common component of industry compensation that promote the recruitment and retention of critical staff and further align employees with the interests of WRS beneficiaries, as the value of the units is determined upon vesting based on the long-term performance of the Core Fund.

About SWIB

The State of Wisconsin Investment Board (SWIB), created in 1951, is an independent state agency responsible for managing the assets of the Wisconsin Retirement System (WRS), the State Investment Fund (SIF), and other state trust funds. As of December 31, 2024, SWIB managed more than $162 billion of total assets, approximately 86% representing WRS assets. SWIB’s management of the WRS trust funds aims to provide a fully funded public pension for over 692,000 current and former employees of state agencies, the university system, school districts and most local governments. The WRS consistently ranks among the 10 largest public pension funds in the U.S. SWIB, a steady economic pillar for the state of Wisconsin, focuses on growing the trust funds, managing risk, and optimizing costs over the long term.