When Ebenezer Scrooge is shown a chilling possible future by the spirit of Christmas Yet to Come, including his own lonely grave and people wishing his departed soul good ridance, he drops to his knees and grabs the spirit’s skeletal hand.
“Good spirit…” Scrooge pleads in Charles’ Dickens “A Christmas Carol.” “Assure me that I yet may change these shadows you have shown me, by an altered life!”
Reading this Bloomberg News story about the Illinois Teachers’ Retirement System leaves us feeling a bit like Scrooge, kneeling in the figurative churchyard, hoping fervently that this isn’t the future that will come to pass for Colorado PERA.
What’s sobering about this article is its clear-eyed description of the pain Illinois will have to endure as it labors to patch the massive hole in its teacher pension system. While the state’s recent decision to lowerbits assumed rate of return from 7.5 percent (identical to PERA’s) to 7 percent is a sensible, prudent move, it will, according to the article,
“significantly” affect how much Illinois will owe in the year that starts July 1, according to the retirement plan. While the magnitude hasn’t been determined yet, if the lower figure had been used for the most recent actuarial evaluation Illinois would have had to pay another $421 million this year, according to the fund’s actuaries.
Experts aren’t confident that broader economic conditions will rescue pension funds anytime soon. Low interest rates keep bond yields low, and stock markets have been more volatile than usual for several years. The roller coaster ride is likely to continue indefinitely.
PERA isn’t yet in the dire straits in which Illinois find itself. But if Colorado’s state pension plan wants a Scrooge-like shot at redemption, its leadership and legislators need to acknowledge PERA’s precarious position soon, and act accordingly. Otherwise, that dark churchyard dream will be one from which we won’t awaken.