In his response to Scott Reeder’s column on the Teachers’ Retirement System’s pathetically low 2012 investment returns, Dick Ingram, TRS executive director, does exactly what his letter accuses others of doing: mislead.
Dick Ingram states that it is false to say that taxpayers must ultimately make up for TRS’s low investment returns. But that’s exactly what taxpayers will be forced to do during the next 30 years. When investment returns come in below expectations, the missing income is added to the unfunded pension liability. State taxpayers are then forced to pump even more money into the pension system to pay down that unfunded liability.
Low investment returns alone created a $7.7 billion shortfall in TRS’s pension fund between 1996 and 2011. State taxpayers will be forced to make up that difference through higher contributions during the next three decades.
Taxpayers are tapped out, and TRS is broke. Only major reforms, like those heavily centered on defined-contribution plans and those tackling the automatic cost-of-living adjustment, can get the problem under control. Is Dick Ingram prepared to get behind comprehensive reforms?
Note to readers: Jonathan Ingram is director of health policy and pension reform for the Illinois Policy Institute.