Illinois’ pension payment expected to increase by $400M

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SPRINGFIELD, Ill. — Illinois’ contribution to the state’s largest public-pension fund is expected to increase by more than $400 million next year after the board overseeing the account lowered its expected rate of return on investments.

The move could lead to higher taxes or massive cuts to education and social services. Those areas are already suffering because of a historic budget standoff and multibillion-dollar state deficit.

The Teachers Retirement System trustees agreed Friday to lower the assumed rate of return from 7.5 percent to 7 percent. An actuary firm recommended the move because of reduced inflation expectations nationally.

Illinois has the worst-funded pensions of any state, with $111 billion in unfunded liabilities.

Gov. Bruce Rauner wanted the board to delay the vote so the state could plan for the higher costs.