Me and Bob (on the right).
– From Bob Lyons. Bob is annuitant representative to the TRS board of trustees.
From time to time, generally at the start of the fiscal year in July and August, we might not receive a full payment from the state but they would catch up by October.
What was different this time was that Comptroller Munger publicly announced the delay and the size of the delayed payments. The headline phrase, “Pensions Not to Be Paid,” hopefully did not diminish our numbers of annuitants, but it called for an effort on the part of TRS to make sure that all of our people know that they will continue to get their monthly checks in full and with the expected increase at the 1st of February.
Considering that the Social Security office just announced there will be no increase in their payments for next year, that fact that our annual increase is an automatic 3%, having nothing to do with the rate of inflation, is a significant advantage. In the 21 years that I have been retired only five years have been above 3% in the CPI and then the highest was 3.8%.
As TRS announced, of the approximately $460 million that they pay out every month about $312 million is from the state covering both the normal cost as well as a partial payment of what they owe us. The other $158 million is divided into $80 million from active teachers, $12 million from school districts, and $66 million taken from our investments.
You should know that we sell a portion of our assets every month. Currently we must gain at least 3% on our money just to break even. Our contributions will fall short by $792 million for the year even when the state makes up the missing payments. This is why we are so far from full funding. In November we will need to sell $378 million out of an index fund based on American equities to send the checks out.
If you want to try to estimate how much additional we are losing because we don’t have the money from the state to invest, the problem is that you do not know where the money would have gone.
If you have questions I will certainly try to answer them, but I can tell you now that you will continue to get your pension check. At one point this summer we did have $47 billion in your fund and the state payments will eventually be paid to TRS.