Learn the facts on teacher pensions

In a recent Daily Herald story, “Ex-school administrators get big pension boosts,” you quote Christina Tobin, vice president of the United Taxpayers of America, as describing Illinois’ public pension systems as “broken and can’t be salvaged.” She also says that unless changes are made soon to bring the systems into line with private sector retirement plans, public pensions in Illinois will “collapse and these government employees are going to have nothing.”

While Ms. Tobin is entitled to her opinion, her rhetoric is not supported by the facts. Teachers’ Retirement System, the state’s largest public pension plan with 372,000 members, is not on the verge of collapse. In fiscal year 2010, TRS paid out $3.9 billion in pensions and benefits. Total revenues in the same year, from teachers, school districts, state government and investments, totaled $6.8 billion. TRS currently has $37 billion in assets. Because TRS is meeting its long-term investment targets and is continuing to receive contributions from members and state government, we will have enough money to meet our annual obligations.

While TRS assets currently do not match the amount needed to pay all current and future retired teachers over the long-term by some $40 billion, the truth is the system’s total liability never comes due at one point in time. TRS has carried an “unfunded liability” on its books since at least 1953 and has never once missed a payment to a member.

Finally, 401(k) plans were never intended to be primary retirement vehicles, and studies have shown that converting the TRS defined benefit plan into a 401(k)-style program would cost more than $1 billion in added administrative costs. Instead of one retirement fund shared by all, the state would have to administer more than 372,000 individual funds.

Dick Ingram

Executive director

Teachers’ Retirement System