Update Friday Afternoon:
Illinois’ payment to its largest public-pension fund is expected to increase by more than $400 million next year. The Teachers Retirement System trustees agreed Friday to lower the assumed rate of return on investments from 7.5% to 7%.
An actuary firm recommended the move because of expectations of a nationwide reduction of inflation.
The move could lead to higher taxes or cuts to education and social services - areas already suffering from a budget standoff and multibillion-dollar state deficit.
Illinois has one of the worst-funded pensions of any state with 111-billion dollars in unfunded liabilities.
Governor Bruce Rauner wanted the board to delay the vote so the state could plan for the higher costs.
The board of Illinois’ Teacher Retirement Systems could take action Friday that would increase the state’s annual contribution by hundreds of millions of dollars. Board members are expected to vote to lower the assumed rate of return on the fund’s investments.
Lowering the rate will increase the amount the state has to contribute. TRS is the largest public-pension fund in the state and is one of the worst-funded pensions in the country with more than 100-billion dollars in unfunded liabilities.
Republican Governor Bruce Rauner wants the board to delay the vote. His administration has warned the increase could lead to higher taxes or have a “devastating impact” on education and social services.
The move comes as pension systems across the United States are seeing lackluster returns and analysts are warning they should adjust expectations.