Legislative Maneuver Making Pension Funds Appear Deficient
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SPRINGFIELD, Ill. (CBS) — A legislative maneuver made nearly three years ago is causing some state employee pension funds to appear less funded than they really are.
The maneuver, called “smoothing,” averages investment gains or losses over five years. It was put in place several years ago so the state wouldn’t have to make up for large investment losses after the 2008 stock market crash. It’s the number lawmakers use to decide how much money to contribute every year.
Investment returns are improving with the economy, so some systems don’t appear as well funded as they are. But Dan Hankiewicz, the Commission on Government Forecasting and Accountability’s pension manager, says that should be the least of lawmakers’ worries.
“I don’t think that this is a big enough issue to be addressed in isolation,” he said. “I think what’s more important at this juncture is to focus on benefits, and perhaps altering benefits for current workers on a go forward basis.”
Illinois’ pension systems must be 90 percent funded by the year 2045, under state law.
LISTEN: WBBM Newsradio’s Alex Degman reports