* This is just the sort of thing that happens when you make the bare minimum payments on your credit card. You pay money in, but your debt still goes up. The object of the pension ramp is to eventually get the state to the point where it’s actually paying down the debt. We’re obviously not there yet. Here’s Hannah Meisel at the Daily Line…
Despite paying historic amounts into Illinois’ five pension systems, the state has made virtually no progress on its path to adequately funding the retirement plans. In fact, three of the five funds experienced net losses in 2019, according to a new report from the state’s Commission on Government Forecasting and Accountability (COGFA).
The total unfunded liabilities for Illinois’ five pension systems ballooned to $137.2 billion during the 2019 fiscal year, according to COGFA — up from $133.5 billion the previous year. But the aggregate level of funding has barely budged at about 40.3 percent.
That’s a far cry from the benchmark set up under former Gov. Jim Edgar in 1994 that required the state pension system to be 90 percent funded by 2045.
When that 50-year plan was passed, the pension system’s funded ratio was significantly better, sitting at 52 percent. The highest the ratio has ever been for all five systems was at nearly 75 percent in the year 2000. But in the subsequent recession the pension systems took a turn for the worse.
The COGFA report is here.
* Greg Hinz points out the obvious problem we’ve had…
The report attributes most of the lack of progress to the state’s failure to annually contribute the amount actuaries say is needed to bring the systems to a 90 percent funded ratio by 2045. The state and its taxpayers are contributing more than ever to the funds, more than $9 billion, but because that’s less than what’s required, any gains on investments are immediately applied to filling the hole rather than raising the funded ratio.
Specifically, according to the report, the pension systems that cover grade and high school teachers outside of Chicago, university professors and judges “experienced a net actuarial loss, mostly due to actuarially insufficient employer contributions and less-than-expected investment returns as well as unfavorable demographics/other factors.“
…Adding… Email from a pal…
The Edgar ramp was a 10-year artificial teaser mortgage to get us into a payment system. AND for all of its problems, it was far better than what existed before.