Bob Lyons. Pension report.

Screen Shot 2020-03-21 at 7.14.46 PM
Bob Lyons (right)

From Bob Lyons. Bob is a retired teacher and a former Illinois Teacher Retirement System annuitant representative to the board of trustees.

While the fiscal year for the Illinois Teachers’ Retirement System starts on July 1 and ends June 30, the system also reports its investment progress at the end of the calendar year.  There is a consistent debate that goes on in the world of investments between buying index funds versus individual stocks, or how smart are your investors vs. just owning the market.

If TRS had just put all of its money into the S&P 500 index, plus reinvesting the dividends, we would have made a return of just over 33%.  Of course, if we had left everything in the same index fund since the start of 2020 we would have given back more than 28% of our total fund as of the close of the market on Friday, March 20.

The reality is TRS uses a variety of individual investment companies that gives our system a highly diversified portfolio with the goal of protecting our wealth while providing the hope of growing our capital in all kinds of markets.  Our assets at the end of calendar 2019 totaled more than $54.2 billion, a 10.4 percent increase over calendar 2018, when assets totaled $49.1 billion.  Our actual investment return for the year was 13.4 percent, after subtracting fees.  The difference between the two numbers is because part of our positive returns must be used to make up difference between the benefits we pay out to our annuitants and the total contributions of active teachers, school districts and the state of Illinois.

The total annual benefits for 2019 were more than $6.89 Billion and are expected to exceed $7 billion in this year.  Those currents benefits will be paid out regardless of the current market turmoil.  The S&P 500, a broader index than the Dow, hit its all-time high on February 19 with our long time Bull Market ending March 9th.  That is to the day, an eleven-year growth market ended. There is absolutely no way to predict what happens now. We are literally in uncharted territory.  The economy is shut down, or at least largely shut down, but our pension checks will still go out.  In fact, our pension checks will serve the same role as the checks that Congress is authorizing to be paid out in the next few weeks in providing a needed income for our society and the American people.  We do our part in helping our nation by spending what we receive.  In the days ahead we can be together by staying apart.  Stay healthy, my friends.  God Bless

One thought on “Bob Lyons. Pension report.

  1. So glad to hear the TRS board is using the index fund aproach to preserving assets. The very long term results are telling. The fund goes on long term even though we do not. The amount saved in management fees long term is teling. Everything NOT spent on management fees stays invested adding to growth. It is important to look at the gains in index funds over 30+ years and not just the last 10 years or so. The man running CALPERS says he maintains 80% in index funds because they are cheap. So, in addition to market gains, add the cost of management fees spent on active management. The investment total is market gains plus management fees NOT spent.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s