The Illinois Teachers' Retirement System says it expects a lower return on its pension investments in the next year. That means the state will have to cover more of the cost of teacher pensions.
TRS says it's still a good assumed rate of investment return at 7.5 percent. That falls in line with similar pension systems nationwide. But it's not as profitable as 8-percent, which TRS had been using for the previous few years.
Dave Urbanek is with TRS. He says the unpredictable nature of the international economy spurred the decision to lower the rate.
Illinois’ biggest and most indebted pension system is beginning to implement changes tied to the pension overhaul passed this month. But officials are also making plans in case the new law is struck down.
The Teachers Retirement System is by far the biggest of Illinois’ five pension systems, with well over 360,000 members. TRS is also the biggest factor in the pension funding problem, accounting for more than half of the combined $100 billion shortfall.
Illinois' largest public pension fund hit a major low in 2012, its rate of return was less than one percent. But an early analysis shows the last fiscal year was better than expected. The success isn’t expected to make much of a dent in Illinois’ nearly $100 billion dollar pension liability, however, which lawmakers thus far have failed to tackle.