Illinois’ biggest public worker pension fund said on Friday its board gave initial approval to a state contribution of $4.56 billion in fiscal 2018, a 14.5 percent increase over the current fiscal year.
Teachers’ Retirement System (TRS) said the higher payment would still fall $2.31 billion below what the state should be contributing to pensions on an actuarial basis.
“By any measure, $4.56 billion is a lot of money, but that amount is a direct product of the perpetual underfunding of TRS by state government over the last 76 years,” TRS Executive Director Dick Ingram said in a statement. “Illinois is reaping what it sowed.”
Illinois’ unfunded pension liability stood at $111 billion at the end of fiscal 2015, with TRS accounting for more than 55 percent of that gap. The funded ratio was a weak 41.9 percent.
The huge pension debt, along with a budget impasse that has left the state limping through a second straight fiscal year without a complete budget, have pounded Illinois’ credit ratings to the lowest levels among the 50 states.
Illinois officials have been bracing for a pension payment increase after TRS, acting on the advice of its actuary consultant, lowered its assumed long-term investment rate to 7 percent from 7.5 percent in August.
TRS said it will give final approval to a fiscal 2018 payment early next year pending a review and approval of its methodology by the state actuary.
The cash-strapped state’s total fiscal 2017 pension payment to its five retirement systems was pegged at $7.9 billion, up from $7.617 billion in fiscal 2016 and $6.9 billion in fiscal 2015, according to a March bipartisan legislative commission report.
ALSO IN U.S.
U.S. Supreme Court takes up major transgender rights case
American Airlines jet catches fire on takeoff at Chicago airport
TRS has 406,855 members and assets of $45.6 billion as of Sept. 30. Illinois’ fiscal year begins July 1.
(Reporting by Karen Pierog; Editing by Matthew Lewis)
Reuters
