While a surging stock market has meant that the Illinois Teacher Retirement System’s investments have seen good returns, the state of Illinois continues to short the system by underpaying the actuarial amount required to reduce the increasing debt and liability.
Active Tier 1 teachers continue to pay what they owe. Active Tier 2 teachers pay into a system that takes their money to slow the increase in the liability but which they will never see as a retirement benefit. And the pension systems return on investments have reached record levels.
Somebody isn’t keeping their end of the bargain.
That would be the state legislature.
In recent months, assets in the TRS investment portfolio earnings have reached record levels, taking advantage of a surging national economy that broke free of last year’s COVID-19 downturn. That’s good news for all TRS members.
As of May 31, TRS managed assets totaling $62.2 billion – a record for the System and a 23.1 percent increase in assets in the last year. TRS held $50.5 billion at the end of May last year and closed fiscal year 2020 with $52.3 billion.
Through March 31 – the end of the January-March quarter for fiscal year 2021 – the TRS portfolio recorded a positive 16.4 percent investment return, net of fees. For the 12-month period that ended in March, TRS performance was a positive 24.3 percent, net of fees.
These results are much improved from the January-March quarter of fiscal year 2020, when the coronavirus affected the world economy and cut into the System’s assets.
All public pension systems lost money during the January-March quarter of fiscal year 2020. But compared to similar public pension systems, TRS ranked among the nation’s leaders in its ability to preserve assets. During the January-March quarter, the TRS investment return was negative 9.95 percent, net of fees. However, an analysis of the 300 largest U.S. institutional investors indicated that the median return for public pension plans then was negative 12.6 percent.
Through forethought and careful planning, the TRS Investment Department successfully navigated the perils of the pandemic’s attack on the economy. It took several months, but TRS was able to rebuild the value of the System’s portfolio to prepandemic levels – and beyond in subsequent months.
The low point during the early months of the pandemic saw TRS assets at $48.5 billion at the end of March. By the end of Sept. 2020, TRS had worked back to $53.5 billion in investment assets, a 10.3 percent rebound in value. Prior to the pandemic, TRS began Jan. 2020 with $54.2 billion in assets.
Of course a retirement system that is so dependent on Wall Street and the stock market will do well when the market is doing well, but it will see hurt when the market inevitably goes down.