Our Pension Assumptions Are Fine by Dick Ingram, Executive Director of the Illinois Teachers’ Retirement System

To the Wall Street Journal:

Your Nov. 23 editorial "Illinois the 'Unfixable'" doesn't provide your readers with an accurate view of investments made by the Illinois Teachers' Retirement System.

You note that the TRS investment return in fiscal year 2012, 0.76%, failed to reach our assumed return rate of 8% in that year. This, however, is misleading. The TRS assumed return isn't a one-year target, but a 30-year goal. TRS will always focus more on long-term investment results. We won't reach that goal every year.

But in the last 32 years, TRS has achieved a return of 8% 21 times. The average TRS annual investment return for the 30-year period ending in 2012 was 9.6%.

If the Journal wants to compare returns from individual years against the long-term target, the TRS return in FY 2011 was 23.6% and 12.8% in FY 2010.

Further, focusing on single years in a volatile economy can lead to erroneous conclusions. The TRS return for the 12 months ending in June 2012 was 0.76%. Just three months later, on Sept. 30, the system's 12-month return was 16.4%.

Branding Illinois's pension problem "unfixable" is solely political fallout from the November elections. It is not a factual analysis. TRS and Illinois's other pension funds face potential insolvency if the state government continues to underfund the systems. However, the problem can be fixed. It will require hard choices and sacrifice, but Illinois can be put on a course to provide retirement security to 366,000 Illinois educators past and present.

Dick Ingram, Executive Director

Teachers' Retirement System of the State of Illinois
Springfield, Ill.

A version of this article appeared December 1, 2012, on page A14 in the U.S. edition of The Wall Street Journal, with the headline: This version is from Our Pension Assumptions Are Fine.