Friday, November 27, 2020

Tag: Illinois On The Brink? The Whole Country Is On The Brink

Illinois On The Brink? The Whole Country Is On The Brink

by Dave Kranzler, Investment Research Dynamics:
The biggest problem facing Illinois is the public pension fund problem. I don’t care what the “official” number is for the degree to which it is underfunded. I can guarantee that even without marking-to-real-market the illiquid investments like private equity funds, derivatives, commercial real estate trusts and other assets that do not have truly visible markets, collectively the public pension system in Illinois is at least 60-70{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} underfunded. Then apply a realistic assumed actuarial rate of return on assets, which would be lower than the current assumption (likely 7.5{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} ad infinitum) and the underfunding goes to 80{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}. The problem is unsolvable without a complete and drastic restructuring.