In fact, if the adopted rate of return figure is less than 7.75 percent, the unfunded liability would continue to grow yearly, said Hans Zigmund, associate director at the Governor’s Office of Management and Budget.
TRS has an unfunded liability of $44 billion, or 55 percent unfunded, meaning it only has enough assets on hand to cover 45 percent of the cost of current and future pensions.
A recommendation for a change to the expected rate of return for TRS investments, which happens every five years, could come as early as its June 21-22 board meeting.
State Sen. Jeffrey Schoenberg, D-Evanston, said the rate of return could be lowered because of pressure from the bond-rating agencies, which determine a state’s credit worthiness.
“The rating agencies like Moody’s and their counterparts have been more insistent in recent years that the return on investments be re-calibrated to be more accurate,” Schoenberg said. “This is not only happening in Illinois, but across the nation as well.”