By: Mark Glennon*

 

[Update 10/2/15: The Department of Insurance report discussed below originally said unfunded liabilities increased $47 billion from $111 billion two years ago, which we cited in an earlier version of this article. I contacted the Department of Insurance to alert them that those numbers were not consistent with the previous biennial report, and they corrected the new report. The corrected numbers are cited below.]

 

The Illinois Department of Insurance publishes, every two years, a compilation of data submitted by all of Illinois’ 672 public pensions. Hot off the press, here is the link to its latest, which the department just posted.

 

If you don’t understand how flawed our pension system is, you might think this would be good news: Net pension assets grew from $139 billion to $158 billion and the funded status actually improved a bit from 49% to 50% since the last biennial report. (Page 4.) Wrong.

 

Total unfunded liabilities, the real bottom line, grew $14 billion from $144 billion to $158 billion over the last two years. (Page 4.)

 

Big salute to the Illinois Department of Insurance, which has made this report far more comprehensive than in the past. The report contains reams of additional data on each pension. DOI also recently opened a data portal, linked here, making still more data available, down to the individual pensioner level. This kind of transparency is long overdue. Thanks, DOI.

 

Keep two things in mind. First, the bulk of these numbers are very old because they represent the last reported actuarial reports. In the case of the statewide pensions, the last reports are from June 30, 2014. Financial markets have struggled since then so unfunded liabilities have worsened substantially.

 

Second, the DOI does not re-skin any data to correct for the shady actuarial and accounting methods and assumptions we write about often here. Accordingly, real numbers are much worse than they show. Most importantly, add in more than $50 billion just for healthcare for pensioners covered by the five state-level pensions, which is entirely unfunded, constitutionally guarantied and not included in these reports.

 

*Mark Glennon is founder of WirePoints. Opinions expressed are his own.

 

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Anonymous

It does not added up. The 5 state pension funds were $95 billion unfunded in 2013 And $111 billion unfunded at end of 2014…. Which is a $16 billion increase in one year. That is more of an increase then the above article says for all pensions.

mark glennon

I now see at least one error they made that would at least partially explain that. The unfunded liability for MEABF at the top of page 22 that they used to do their totals is wrong. Should be $7.1B.

mark glennon

Yep, good point. The numbers from the report are quoted right, but I agree that the increase in unfunded liability seems too low.

Bruce

Imagine how much could be saved if everyone had their own retirement account they managed themselves…

Tough Love

YES Bruce, because such Plans would be DC (not DB) Plans like the one Private Sector workers typically get from their employers (e.g., 401K Plans) under which annual employer contributions (of typically 2%-4% of pay) are about 1/5 to 1/10 the TRUE annual contribution requirement to fully fund Public Sector DB Plan promises over the careers of the workers.

The Taxpayers are (theoretically*) the sucker in this equation.

*Theoretically, because the Taxpayers have ZERO intention of actually PAYING for these grossly excessive promises that have been made to Illinois’ workers. The REAL suckers are the workers/retirees, and that tsunami wave is just round-the-corner.

wpDiscuz