SPRINGFIELD, IL – For the third straight year, the long-term funded ratio of Teachers’ Retirement System has improved, reaching 44.8% at the end of fiscal year 2023. That is a positive increase of 1% over the previous year’s funded status of 43.8%.
The TRS Board of Trustees gave preliminary approval to a $6.20 billion state government contribution for the System in fiscal year 2025. That is a 2.7% increase over the state’s $6.04 billion contribution for the current fiscal year.
“We have made significant progress over the past four years to improve our funded ratio,” said Stan Rupnik, executive director and chief investment officer of TRS. “In each of the past three years, the Governor and Illinois General Assembly have made contributions to the System in excess of the statutory minimum funding. Their commitment to funding, combined with our positive, long-term investment returns, has led to this increase.”
The total TRS unfunded actuarial liability at the end of fiscal year 2023 was $81.9 billion; a 1.5% increase over the $80.6 billion unfunded liability recorded in fiscal year 2022, according to the System’s annual actuarial valuation, compiled by Segal Consultants, of Chicago.
In the last decade, the TRS funded ratio averaged 41.6%. Projections by Segal show slow but steady improvements in the funded ratio between fiscal year 2023 and fiscal year 2045, when state law requires TRS to have a funded ratio of 90%. The funded ratio has seen the most significant improvement since fiscal year 2020, from 40.5% to 44.8% in fiscal year 2023.
While the funded ratio is important as an official measure of the System’s long-term fiscal health, it is not a reflection of the System’s current financial ability to pay benefits. In any given year, TRS only is obligated under state law to pay out the amount of money owed annually to eligible retired members and other beneficiaries. During fiscal year 2023, paid benefits totaled $7.9 billion. For 84 years, TRS has paid all benefits in full and on time.
In other Board action during its regularly scheduled October meeting, the following investment actions were reported:
- Aksia, LLC was selected as a diversifying strategies consultant and will provide ongoing consulting services to TRS staff in the management of the $3.4 billion Diversifying Strategies Portfolio.
- The annual tactical investment plan for Global Income was approved.
Within the System’s $11.3 billion Private Equity Portfolio:
- The commitment of $200 million to New Mountain Capital of New York. New Mountain currently administers $311 million in TRS assets.
- The commitment of $165 million to Altaris Capital Partners of New York. Altaris currently administers $148 million in TRS assets.
- The commitment of $100 million to NGP Natural Resources of Dallas. NGP currently administers $168 million in TRS assets.
- The commitment of €60 million to Bregal Unternehmerkapital of Munich, Germany. Bregal Unternehmerkapital currently administers $44 million in TRS assets.
- The commitment of $50 million to Elephant Partners of Boston. This is a new investment relationship for TRS.
- The commitment of $30 million to FinTech Collective of New York. FinTech currently administers $41 million in TRS assets.
- The commitment of $100 million to Aurora Equity Partners of Los Angeles. Aurora currently administers $49 million in TRS assets.
- The commitment of $75 million to PSG of Boston. PSG currently administers $43 million in TRS assets.
Within the System’s $23 billion Public Equity Portfolio:
- The commitment of $225 million to Driehaus Capital Management LLC of Chicago. This is a new investment relationship for TRS.
- The commitment of $100 million to RWC Asset Advisors (US) LLC of Miami. This is a new investment relationship for TRS.
About Teachers’ Retirement System
The Teachers’ Retirement System of the State of Illinois is the 42nd largest pension system in the United States, and provides retirement, disability and survivor benefits to teachers, administrators and other public-school personnel employed outside of Chicago. The System serves over 448,000 members and had assets of $66 billion as of Sept. 30, 2023.