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The retired firefighters, police officers, teachers and other state and municipal employees of Wisconsin are set to suffer yet another reduction in their monthly pension checks. On May 1, for the fifth year in a row, many of the 168,000 retirees and beneficiaries in the Wisconsin Retirement System (WRS) will begin receiving payments that are as much as 13 percent smaller than in 2012.

But it’s not just retirees who will have more trouble making ends meet in the Badger State. The 256,000 active employees in the WRS have been taking home smaller paychecks since July 2011. That is when Governor Scott Walker and the state legislature, as part of an effort to close a $3.6 billion state budget gap, mandated that public workers split the required contributions with their employers. Before that Wisconsin municipalities picked up most or all of their employees’ share of pension contributions.

At first glance, these reductions look similar: Both retirees and active employees will take home or receive less money than in years past. But there is a key difference. While current employees have recently begun to share their pension contributions with their employers, the retiree reductions are a direct result of a well-­constructed pension machine that increases or decreases payouts in tandem with the gains and losses in the WRS’s investment portfolio, which now has $84.6 billion in assets. Designed decades ago and unique among the 50 states, the ninth-largest public pension system in the U.S. features a mechanism that insulates Wisconsin from wide swings in funding by balancing both cost-sharing and risk-sharing between employers (that is, taxpayers) and employees.

Wisconsin’s multilevered retirement machine also awards pensioners an annual “bonus,” or dividend, when asset prices are rising that has reached as high as 17 percent (during the bull market in 1999). Retirees can also rest assured that their pensions are secure for the long haul despite any short-term gain or pain, because the adjustability feature keeps the WRS close to 100 percent funded. For their part, taxpayers can take comfort in knowing they won’t get hit with an increase because of a shortfall in the pension trust fund. Although the investment portfolio lost 26 percent of its assets in 2008, when the financial crisis exploded, taxpayer savings have been impressive: At the end of the 2013–’14 pension calendar year, the state will have shaved total pension benefits by $4 billion over five years.