News - Bill's Blog

Who lives longer – teachers in Chicago, or teachers in the rest of Illinois?

July 24, 2017

Government employee pension plans face huge funding shortfalls – and debts for taxpayers, in Chicago as well as Illinois generally. 

Some of the largest plans cover public schoolteachers.

In order to estimate the liabilities for these plans, the accountants, actuaries and board fiduciaries rely on “mortality tables.”  These tables yield assumptions that help (in theory) develop valid expectations for how long plan participants will live after retirement – and in turn, the amount of the current present value of the liabilities for those long-term promises.

In the last decade, it has become apparent that people are living longer than previously expected in long-term projections like these. And it has become important to rely on the most recent mortality tables.

But the actuarial valuation report for 2016 Chicago Teachers’ Pension Fund reported that it is using a table from 2000, while the 2016 report for the Teachers’ Retirement System of the State of Illinois reported that it is using a mortality table from 2014.

And these two reports, for different plans, were prepared by the same actuarial firm. 

See the report for the Chicago teachers’ plan here.

See the report for the Illinois teachers’ plan here.

Could the difference be at least partially related to negotiations leading to recent budget legislation for the State of Illinois, legislation with significant implications for the financial relationship between the City of Chicago and the State of Illinois?

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