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Summary and audio linked here.
Chicago’s political leadership is floating a pension buyout program as evidence it is seriously addressing the city’s thirty-six-billion-dollar unfunded pension liability, but Mark Glennon, founder of the Illinois policy research organization Wirepoints, said that the proposal moves debt from one column to another rather than reducing it, and that the broader fiscal picture facing the city continues to deteriorate across every measurable dimension. Audio here.
Expect no retraction or apology. This what they do.
The state’s existing buyout program for its own pensions is the precedent for Chicago, which should be a warning: Look out for similar exaggerated claims and shoddy analysis.
Full interview and summary linked here.
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In 1989 when the 3% compounding was instituted the prime rate was 10.5%.So at that time it was reasonable. Problem is that the 3% was never indexed to any measure of inflation like CPI/etc. What was the rate of return in 1989 for TRS? Just putting it in a MMF then would yield 10.5%. Today it’s almost 0% but they are still getting 3% compounded while banks pay 0.01% or 300 times less. Today the TRS has $51B in assets. What % of assets are in a money market account making nothing but it doesn’t matter since taxpayers are on… Read more »
I forgot pension management fees. What was the total since 1989? Fees are paid regardless of returns so my estimate is many-many billions right off the top.
How do their returns compare to a 70/30 mix of Vanguard ETF’s?
Get ready for a bust out at TRS the next two years. They go heavy into fixed income when everyone in the world knows interest rates are about to rise–which means the value of bonds goes down. Even the Fed is giving warnings on this. And now they move heavier into public equities–after the longest bull market in history is about to plateau out. And zero in cash? With no cash do you have any opportunity left to be an opportunistic investor? No. Somebody better look very quickly at the advice the IEA (Teachers union)/Pritzker political hire investment advisor is… Read more »
Party is over