Employers pay for two types of obligations when they make payments to the employer reserve. One is for the benefits connected with employees' current service. The other is for the benefits connected with employees' past service. The latter obligation can arise when an employer chooses to join the WRS and wants its employees to have credit for services previously rendered, or when the legislature retroactively enhances retirement benefits for services previously rendered - thus creating a liability for past service. Employers make annual payments to reduce their unfunded liability based upon a percentage of payroll.
Employers also pay interest on their unfunded liability.
However, the unfunded liability of WRS employers is not an absolute, unchanging amount. The obligations of and funding for a pension plan are both based upon assumptions which change over time. To determine the funding necessary to pay these obligations, those assumptions include the rate of return on trust fund investments. The Employee Trust Funds Board retains an actuary to review these assumptions regularly, and as a result adjustments are made to the employers' contribution rates. Also as a result of these changing assumptions, employers' unfunded liability has been recalculated several times.