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.
As the pension fund for all current and retired public school teachers outside of Chicago, the Teachers Retirement System is the largest of Illinois' major public pension funds. Which is to say, how well TRS performs can indicate how well the other pension systems will do.
Last time around, that wasn't so good -- TRS saw a rate of return of just .76 percent.
But the latest annual numbers came in at more than 13 percent -- half a percentage point higher than TRS's benchmark.
TRS spokesman Dave Urbanek says that's good news, but he says it will only make a small difference in shoring up Illinois' underfunded pension systems.
"When you have a good investment year, the amount of money that the unfunded liability is growing by will change," Urbank says. "It just depends on how well you're managing that. Suffice it to say, that given the current laws and the current pension code, the cost of benefits is always going to increase form year to year. What we're trying to do is manage the portfolio in such a way that investments continue to increase too, so you don't have a huge increase in the cost from year to year. We do the best we can. Sooner or later, it's a function of the state money coming in as well. Because we ... have known for a long time that you cannot invest your way out of these problems."
Urbank says there's enough money to pay benefits in the short-term; but at some point the state's underfunding will catch up with TRS. For years, Illinois skipped paying its share of employees' retirement benefits.