US - The $36.5bn Illinois Teachers' Retirement System (TRS) has criticised the state government for "short-changing" the fund and called on it to make public pension systems a "funding priority."
TRS made the statements on the back of a field hearing aimed at examining retirement security of state and local government employees.
TRS submitted written testimony to the committee which it claimed described "how the state had short-changed its public pension systems for decades."
Jon Bauman, executive director of TRS, said the fund welcomed the subcommittee’s attention to the Illinois pension funding problem and hoped it generated the public awareness needed to effect change.
Illinois’ unfunded pension liabilities for its five state-funded retirement systems now total $38.6bn, and Illinois’ unfunded liabilities are among the highest in the nation, according to the public fund survey compiled by two national public retirement system associations.
Under Public Act 94-0004, approved last year, the state cut funding by $2.3bn to Illinois’ public pension systems during fiscal years 2006 and 2007, with the TRS particularly hard hit as it lost over a billion dollars in state appropriations under the law.
Despite strong investment returns in recent years, the state funding cuts required TRS to liquidate $1.2bn in investments over the past year to pay current benefits, said Bauman.
The law also enacted changes designed to reduce the cost of pensions, such as requiring school districts to pay for end-of-career salary increases above 6 percent that are used to determine pension benefits, he said.
“Unfortunately, most of the savings that would have been achieved by TRS in this law have been offset by the reductions in state funding,” said Bauman.
“The state must make its public pension systems a funding priority."
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