Home Delivery |
Contact Us |
Jobs |
Alerts |
News Archives |
Site map |
Log In |
Webmail |
Internet Services |
Mobile
Text size: 
Illinois lawmakers invest retirement dollars in junk bonds
|
SPRINGFIELD – Years ago, when I was a reporter for a newspaper in Las Vegas, I encountered a homeless family living in a shelter. The family consisted of a husband, wife and their four children who lost everything because of the husband's gambling habits. "When I lost the rent money, I decided it was time to go back to the casino and win it back," the father explained. The parents took more risks trying to win their money back; instead they became destitute. This is the same mindset Illinois lawmakers have as they invest pension money. The state is turning to increasingly risky investments in an effort to make up its shortfall. For example, the Teachers' Retirement System, or TRS, holds more than $1 billion in junk bonds, formally known as sub-investment grade securities. More than 14 percent of the TRS bond portfolio is tied up in junk bonds according to its comprehensive annual financial report for 2012. Companies in financial distress issue these bonds and try to lure would-be investors by offering high interest rates. Of course, if the company goes bust, speculators lose everything. I don't know about you, but I wouldn't want to invest any of my retirement savings in this type of scheme. But apparently, some folks in state government think it's a perfectly fine place to put our teachers' retirement savings. The problem is our state pension systems are underfunded to the tune of more than $200 billion, under new accounting standards. So those handling investments for the pension funds are feeling the pressure to get higher returns. And if those investments go south, Illinois taxpayers will be asked to make up the difference. Investment losses are one factor in a complex formula pension funds use when determining how much tax money to request from the Legislature each year. It should frustrate not just teachers but all Illinois taxpayers that their money is being invested in this manner. Even more frightening is that legislation has been introduced to make the state taxpayers explicitly responsible for pension systems' shortfalls. Do taxpayers really want to be guaranteeing junk bonds? So who can be trusted? I, for one, believe in the individual. Eighty-five percent of private sector workers don't have pensions. They use IRAs, 401(k) plans and other defined contribution plans to make investment decisions for themselves. Why not government workers as well? Scott Reeder is a veteran statehouse reporter and the journalist in residence at the Illinois Policy Institute; sreeder@illinoispolicy.org. 
|
|
 |
|
||
Rock island, IL Details |
|||
Cranberry-Orange Relish
(More recipes)
| (More Print Ads) |
Today is Thursday, May 23, the 143rd day of 2013. There are 222 days left in the year.
1863 — 150 years ago: Messrs. J. and M. Rosenfield have moved their leather and hidestore to the building formerly occupied by Temple Bufords's store. They buy and sellhides, pelts, furs, wool, beeswax, lard, tallow, etc.
1888 -- 125 years ago: The Rock Island Lumber Company has recovered 5,000 of the8,000 logs that were carried away by the Mississippi River flood last week.
1913 -- 100 years ago: John J. Ullemeyer has been awarded the contract to furnish RockIsland fire and police department members with uniforms, at the city's expense.
1938 -- 75 years ago: Work on Aledo's new $38,000 swimming pool was started thismorning at South Park when ground for the pool was broken by Mayor John W. Murphy.
1963 -- 50 years ago: Students and teacher at Moline High School called today "MissLeona Day" day at the school in honor of the government teacher who retires at theend of the school term. Although she's been teaching for 43 years at the school, Miss Dayfound a new way of arriving at the school this morning. At 7:30 a.m., a police squad carpulled up in front of Miss Day's home and escorted her to school. A caravan of students' cars joined the procession along the way.
1988 -- 25 years ago: Barbecue cooking and riverfront antics are planned for Discover the
River Day Saturday in Leach Park, Bettendorf. A 5K run, wind surfing, a canoe race, hogcalling and more will round out the day under the Interstate 74 bridge.
(More History)