Column off base regarding TRS criticism

Published: Wednesday, Nov. 14, 2012 1:15 a.m. CDT

A recent Illinois Policy Institute column erroneously suggested that Illinois’ Teachers’ Retirement System made “bad investment decisions” last year. In reality, teachers’ retirement money is in good hands. Over the past 10 years, total assets available for pensions has grown 62 percent to $37.5 billion.

Over 30 years, TRS investment returns are 9.6 percent – higher than our 8.5 percent target. Long-term results matter more than short-term because Illinois has promised pensions to all teachers, including those who won’t retire for 30 years.

The column focused only on the System’s 0.76 percent investment returns for fiscal 2012. Left unsaid is that the lower-than-expected earnings were caused by an unpredictable economy.

There were no significant changes in TRS investment strategy over the past 2 years, yet while this year’s return was 0.76 percent, last year TRS earned 23.6 percent. Also, the 0.76 percent rate is a 12-month “snapshot” at the end of June. The TRS investment return for 12 months ending in September was 16.4 percent. That’s a 2,000 percent upward swing in just 3 months.

The IPI column also falsely implies that TRS is asking the state for more money this year because of recent investment levels. In fact, the state’s annual contribution is required by law regardless of how much TRS earns. The state created TRS and is responsible each year for a portion of its funding. Last year, when TRS investments earned 23.6 percent, the state was still required to contribute $2.1 billion.

Note to readers – Dick Ingram is executive director of the state Teachers’ Retirement System.

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