Saturday, April 30, 2016

Amsterdam by Jacques Brel (Sung and Played by Fred Holstein)

TRS Funding for Fiscal Year 2015 (from Bob Lyons, Trustee, TRS Pension Board)

TRS assets are held in trust and are invested for exclusive benefit of plan members. We started FY 2015 on July 1, 2014 with $45,824,382,514 and ended on June 30, 2015 with $46,406,915,593. The TRS investment portfolio returned 4.0% and our assets increased approximately $664 million during the year. Our funded ratio also improved from 40.6% to 42% for the year.
Statement of Changes in Net Positions Ending June 30, 2015:
Contributions from Active Teachers
State of Illinois
Federal Funds
School districts (early retirement, 2.2 and excess salary and sick leave)
Total Contributions
Net Income from Investments
Total Additions


Retirement Benefits
Survivor Benefits
Disability Benefits
Refunds (contributions returned to in-actives)
Administrative Expenses (total cost of running TRS)
Total Deductions:

You should note that while our total contributions for the year came to $4,458,707,579, our deductions were $5,646,724,003, an imbalance of over $1.19 billion. Fortunately, that was more than made by our investment return of $1.77 billion. TRS must make at least 2.5% on our investments just to break even for the year. 

TRS Returns for calendar year 2015:
Illinois Teachers Pension Fund made 1.1% for 2015, which put the fund in the upper 10 percent of its peers. The average large public pensions for the last calendar year lost 2.1%. What made the difference for us was our greater reliance on both real estate and alternative investments. Our return for three years was 7.6%; five years 7.6%; and ten years 5.6%. Multiyear returns are annualized. The board set the expected rate of return at 7.5% last year.
TRS' best performing asset class for the year ending December 31 was real estate, which returned 14.8%. Private equity followed with 3% and hedge funds returned 2.8%. International equity produced the worst return at -4.9%, real return at -4.6%, and global fixed income off at -04%. The key to investing today is diversity. In years past, pension fund investments were limited to stocks and bonds and we would have had a poor year if those rules were still in place. Of course because we owned more real estate, our losses in 2008 and 2009 were greater than many other pension funds.
Though we still do not have a budget for the fiscal year, a continuing resolution mandates that state will pay $6.7 billion to the five pension funds and specifically $3.7 billion to TRS. As in other years, the state missed its July contribution, gave us only half of August, and skipped November, so they owe us over $700 million. Illinois Comptroller told us last fall that the state's goal was to make us whole with the April returns on state taxes. The very real problem for Illinois is that their expected revenue for this year in the GR fund is only $32 billion, and the pension payments are over 20% of their total money coming in. In the recovery after the Great Recession, the average public state pension has climbed back up to low 80%. Public pensions in Illinois are, with the exception of those funds in Puerto Rico, the lowest in the nation and the state is challenged to make its current contributions. The need for the state, the Governor, and the leaders of the General Assembly to come together to work for a real solution for Illinois grows with the passage of every day.

Retirees by benefit ranges — August, 2015:
Below $50,000
 $50,000 - $99,999
$100,000 - $149,999
$150,000 - $199,999
$200,000 - $249,999