CHICAGO, June 24 Illinois' biggest state pension
fund on Tuesday lowered its expected investment return rate, a
move that will increase its unfunded liability.
The Teachers' Retirement System (TRS) board of trustees
lowered the rate to 7.5 percent from 8 percent, calling the
reduction prudent following a recent review of its asset
liability model and revised capital market assumptions.
"The board's decision takes into consideration extensive
input from our actuaries and investment consultants," TRS
Executive Director Dick Ingram said in a statement. "It is one
of the most important elements of the fiduciary duty we have to
keep the system as strong as possible."
The lower rate will increase the system's unfunded
liability, which was $54 billion at the end of fiscal 2013, but
the amount of the increase is not yet known, according to TRS
spokesman Dave Urbanek.
A $100 billion collective unfunded liability in Illinois'
five state pension funds led to the passage in December of
comprehensive reforms aimed at saving nearly $145 billion over
30 years. However, a state judge in May suspended the law until
lawsuits brought by labor unions, retirees and others
challenging the constitutionality of the reforms are resolved.
TRS, whose 390,000 members are current and retired teachers,
administrators and other public school workers, had assets of
$44.2 billion as of the end of May. The system does not include
the Chicago Public Schools, which has its own retirement system.
(Reporting by Karen Pierog; Editing by Eric Walsh)