For teachers, focus is on political pension problems

Friday, June 11, 2010

Matt Whipple has 11 years until retirement—not that he’s counting. That doesn’t stop the 44-year-old Glenbrook South High School social studies teacher from thinking about his post-teaching financial security, even though he’s not thoroughly reading his quarterly and annual reports from the Teachers’ Retirement System and probably couldn’t name a fund in which TRS is investing.
“Do I read my annual report as closely as I should? Probably not,” Whipple said. “But I don’t know how many teachers actually do.”
Instead, Whipple is more focused on the politics surrounding TRS’s financial health. TRS is only 39 percent funded and last month, the Illinois General Assembly adjourned without passing a $4 billion borrowing program, which would help cover public pension fund liabilities this year. The state’s series of pension fund holidays are adding up and could affect Whipple’s retirement if TRS can’t meet its payments.
The pension fund shortfall comes at a time when as of fiscal year 2009, one-quarter of TRS’s members and beneficiaries are receiving benefits and almost another third of TRS members are inactive but have yet to receive benefits. As baby boomers start to retire this number is expected to rise.
“Looking down the road undermines the ability for growth,” Whipple said. “I’m paying 9.4 percent [into the pension fund] and assuming the state is paying its share.”
Whipple has hedged his bets. With the help of an investment adviser, he manages a 403(b), the public education equivalent of a 401(k). There is no employee-matching program, but the added retirement cushion helps him sleep at night.
“My strategy is not aggressive,” Whipple said. “It’s focused on long-term growth because I don’t plan on tapping it until later.”