SUMMARY

Under Act 12, the City of Milwaukee was permitted to impose a sales and use tax of 2.0 percent and use the revenue to fund employer contributions to the Retirement System. Act 12 had other requirements, including closing the plan to new employees hired after December 31, 2023, and prohibiting increases or enhancements to Retirement System benefits for employees remaining in the Retirement System after December 31, 2023, except those required for compliance with federal law.

The City of Milwaukee reported $200.6 million as revenue for calendar year 2024 from the 2.0 percent sales and use tax. Each year, an amount up to 90 percent of the revenues collected in the first full year in which the tax was imposed may be used to fund certain components of the employer contribution amount. The maximum amount of the tax that can be used to fund employer contributions in any one year is $180.6 million. The actuary calculated that $137.8 million and $141.3 million of the employer contribution amount for calendar year 2024 and calendar year 2025, respectively, was eligible to be paid from the sales and use tax, based upon the requirements of Act 12.

The Retirement System is funded by investment income and contributions. As of December 31, 2025, the Retirement System reported total investment assets of $6.5 billion. Under the Retirement System’s investment policy, the Annuity and Pension Board of the Retirement System is required to contract with investment managers to invest and manage the assets of the Retirement System. During 2025, the Retirement System contracted with 24 investment managers. In 2025, the Retirement System reported net investment income of $756.0 million. From 2021 through 2025, net investment income represented 69.3 percent of total funding for the Retirement System.

Retirement System contributions due from employers are calculated using actuarial methods and contributions from members are defined in the City of Milwaukee Charter. In 2025, the Retirement System reported $254.6 million in total contributions, including $220.9 million from employers and $33.6 million from members. Member contributions varied between 4 to 7 percent of employee pay. From 2021 through 2025, total contributions represented 30.7 percent of total funding for the Retirement System, of which employer contributions represented 25.6 percent and member contributions represented 5.1 percent.

The amount of pension benefits provided to retired members or their beneficiaries as annuity payments increased from $488.0 million in 2024 to $493.3 million in 2025, or by 1.1 percent. Retirement System pension benefits are based on a member’s years of service, a percentage multiplier, and a final average salary. The effective date and amount of any applicable pension escalator, which is an annual increase in a retired member’s benefit payment to account for cost-of-living adjustments, vary by the member’s employee group and several other factors. The average annual benefit payment increased from $34,498 in 2024 to $35,323 in 2025, or by 2.4 percent.

Administrative expenses include salaries and fringe benefits, information technology and other professional services, and general office expenses. Administrative expenses, which are paid by the City of Milwaukee and then reimbursed by the Retirement System, increased from $9.3 million in 2024 to $10.1 million in 2025, or by 9.0 percent. This increase is largely due to increases in professional services and information technology services costs during this period.

The Retirement System has reported a net pension liability for each of the last five years. As of December 31, 2025, the net pension liability was $1.8 billion, which was $0.3 billion less than the $2.1 billion as of December 31, 2024. The Retirement System was 77.8 percent funded as of December 31, 2025. The net pension liability as of December 31 was $0.5 billion for 2021, $1.5 billion for 2022, and $2.1 billion for 2023.

Fiduciary net position, which represents the value of the Retirement System’s assets that are restricted either for pensions or for other governments, is a measure of overall financial condition. In the Statement of Fiduciary Net Position, the fiduciary net position is shown as Total Net Position. The fiduciary net position of the Retirement System on the basis of generally accepted accounting principles (GAAP) increased from $6.0 billion as of December 31, 2024, to $6.5 billion as of December 31, 2025, or by 8.4 percent. This increase is primarily attributed to investment income, including unrealized gains from investments. The fiduciary net position as of December 31 was $6.4 billion for 2021, $5.5 billion for 2022, and $5.8 billion for 2023.