A Monday memo from a top Rauner aide said the Teachers’ Retirement System (TRS) board could decide at its meeting this week to lower the assumed investment return rate, a move that would automatically boost Illinois’ annual pension payment.

Comment: In the long run assumed returns makes no difference. The pension will be liable for the benefits. In fact, unrealistically high return expectations make the annual underfunding worse.

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4 years ago

Three of the thirteen TRS Board of Trustees seats are vacant.
All three are Governor appointments.
http://www.trs.illinois.gov > About TRS > Trustees > Members

J.A. Herzrent
4 years ago

An assumed rate of return that is too high “kicks the can down the road.” Reducing the assumed rate of return adds burdens to the current expense budget. If realistic assumed rates of return had been used in the past, presumably less would have been available for teachers’ salaries and school boards would have bargained harder to oppose salary increases. While the pension board may be controlled by union members and assuming the actuaries are recommending that the return assumption should be reduced, it seems hard to fault the proposed action. On the other hand, if the board is “manipulating”… Read more »

4 years ago
Reply to  J.A. Herzrent

Every year they should just set the rate to what they actually realized in the previous year minus a quarter point. This would take the politics and guessing out of it entirely. And make it conservative by a quarter point. Base it on the nearest actuals. Then let everybody live with reality. Right now they are basing the rate on the consequences of various political fallouts it seems.