Are Illinois Pensions Fair To the Rest of Us?

Are Illinois Pensions Fair To the Rest of Us?

Pensions for government workers continue to drag on the Illinois economy, adding to the already out of control debt, of which our state can ill afford. It is an issue that needs to be addressed in the near term to get our state out of the red and support needed programs that are getting left behind due lack of money.

For years, government positions paid lower wages. Pensions were in place to make up for some of the lower salaries of government employees. The philosophy was “make less money now and you will be rewarded in your retirement with a hefty pension.” This worked for many years, until government wages increased and became competitive with private sector wages. Currently, the tax payers are left “holding the bill” to fund these pensions. And, in many cases government employees are also receiving social security benefits in addition to their pensions.

The private sector has eliminated most of its pensions as not to bankrupt the company. The reality is that no business can afford to pay for pensions. As a population, we are living much longer and the cost of funding these pensions is no longer feasible. The tax payers are taking the hit as fewer workers are paying into the system and supporting the pension pay outs.

Here lies the problem for the public sector. Our government can no longer afford to pay out these pensions for government jobs without going bankrupt. The federal government also struggles with the same issue and have no capacity to bail out the states. IRS executive, Lois Lerner, of the IRS infamy and Tea Party targeting, could be in line for a $50k a year pension. Though both the federal and local governments downplay the average pensions as being meager, the real numbers tell a much different story.

In Illinois, a member of the Teachers Retirement System who retired in 2012 after 30-plus years of service could expect to receive an initial average pension of $72,693. After just 10 years of cost of living adjustments the pension would be worth more than what the person was making in salary at retirement

Based on the 2012 Comprehensive Annual Financial Reports and SURS data compiled through the Freedom of Information Act, the average pension for Illinois state workers with 30 years of service would be $42,168. This number would be $78, 704 for legislators and $145,992 for judges!

Confirmed by the pension’s systems own records, the Illinois government workers retiring today after spending most or all of their careers in government will benefit from exceedingly generous pensions. It is fact that many choose to ignore, yet pension reform is necessary to insure the future of our government and the people it serves.

What are you thoughts on this complicated issue?

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  • fb_avatar

    Illinois is one of the states that doesn't tax pensions (or much other retiree income), so not only are these pensions far higher then what private employees can expect, those collecting them pay no income tax. Why is taxing retirement income (maybe with a 2-3x multiplier in the personal deduction to protect the low income retiree) never a consideration? Making a person with a $30,000 salary pay income tax to fund someone make 2-3 times that in tax free income doesn't seem fair to me. Yes, I recognize that to pass constitutional muster, all pension, not just public pension money, would be subject to income tax, but it is one way to try and balance things out.

  • It is complicated and I certainly don't have the answer. But I know that all taxpayers are extremely frustrated with this and the fact that it's been ignored for so long by legislators.
    If a private business would go out of business if it didn't fix the problem, why can't the government do the same. The truth is, it's not that they can't, it's that they won't. It's a hard thing to do and nobody wants to do it.

  • In reply to Margaret Goss:

    How can the government go out of business?

  • Lots of inaccuracies here:
    1. "And, in many cases government employees are also receiving social security benefits in addition to their pensions."
    Not true. Have you not heard of the Government Pension Offset?
    Social Security is reduced dollar for dollar by state pensions and in most cases is zero. However, the federal govt. keeps the Social Security contributions made by working outside state employment.
    2. "After just 10 years of cost of living adjustments the pension would be worth more than what the person was making in salary at retirement". It isn't worth more in infaltion-adjusted dollars.
    Inflation averaged 3% a year over the past 30 years, which is exactly why a COLA is given of 3%. So in real dollars, it's the same pension.
    3. "Pensions for government workers continue to drag on the Illinois economy". No kidding, Sherlock. That's because the State skipped pension payments to build bridges, pay hospitals, and run prisons. And keep the state income artificially lower than any other progressive state. Time to pay the piper.

  • In reply to CityGal:

    And to your third point, why did the politicians build bride bridges and repave the same highway every year? To launder campaign money back into the politician to pay for the next campaign. So we are asking the same thieves to suddenly walk the straight and narrow? Fat chance.

  • Illinois will be the first state to go into receivership, however that will work

    The politicians of both parties stole from the retirement funds to fund a bloated and corrupt government, and those same politicians show no real interest in solving the problem, despite Gov Quinn's grandstanding, because to go back to the taxpayer and say "we need more, a lot more," will not work as the tax burden is already higher than can be sustained by the average resident.

  • fb_avatar

    This is not complicated at all. We the taxpayers made a deal with every employee. We said: we will pay you for your work: $1 cash, but we will deduct 25 cents of that, and put it into a retirement account, and we will contribute an additional 25 cents to that account. Then when you retire, you can collect what is in the account.

    The employees kept their end of the bargain: they did the job as agreed, they had their 25 cents taken out of their checks each pay period. We, the taxpayers, however, did not keep our end of the deal. We did not put our 25 cents into the account, and worse, we took some of the money the employee deposited, and spent it on ourselves.

    Now the employees are ready to retire, and we--the freeloaders and thieves--say sorry, there is no money in the account, because we stole it all.

    The people who raided the funds should be in jail, and we the taxpayers have to make up the difference...after all, we elected the thieves.

  • In reply to Alan Mills:

    With all due respect, Alan, I did not elect the thieves. Your pat prescription of making the taxpayers make up the difference is going to be the only solution, because Illinois cannot print money. However, the tipping point has already been reached -- reached long ago, in fact-- between what is affordable taxation and what is not for the body politic. More people will leave Illinois leaving it to become the state of Detroit.

  • Alan Mills,
    That's the best description of the problem I've read.
    Please send it to the newspapers.

  • fb_avatar

    It is a complicated issue, though one wouldn't know that by reading your misleading post.

    TRS is exempt from social security; no benefits are accrued for teaching, and participants who qualify for benefits through other work get a fraction of their benefit, if they get anything at all. It's crucial to understand that every public employee made a payment toward their pension (nearly 10 percent for TRS members) with every paycheck throughout their career. It's also important to understand that, while the employees have done nothing wrong, they are willing to help solve the problem and have negotiated an agreement (SB2404) that has already passed the Illinois Senate but hasn't been called in the House.

    Finally, the state's budget problem was caused, not by the cost of benefits, but by the cost of underfunding the pension systems. The state benefited by diverting money from the pension systems and now the bill is due. Support efforts to address this issue in a fair way.

  • fb_avatar

    Thanks to Alan Mills, Citygal, and Charlie McBarron for setting the record straight on so many issues.
    While the article is rife with misleading data, I'd like to point out one statement in particular. When the author writes "This worked for many years, until government wages increased and became competitive with private sector wages." I would say rather that that competitiveness arose more from extreme drops in private sector wages, with business leaders engaged in a decades long push to drive out collective bargaining/organized labor and drive down worker (total) compensation, resulting in a shrinking middle class and wealth polarization not seen since 1916. But they cannot push private compensation down much lower than the line drawn by the public workers. Make no mistake, the calls from the private sector leaders to curtail public pensions has less to do with balancing the government books than it does with union busting.

  • In reply to Daniel Foster:

    Thank you all for your comments. I agree that our government has used pension monies to fund other programs, as they have in the federal government when using social security monies to do the same. It is just a problem when there are so many entitlement programs and not enough money coming in to pay out. I still say the government pensions for all workers including the politicians that make the rules need a total re-haul and there lies the problem. Legislators don't want to cut their pensions either. But, where will the money come from? We are living in a society where everyone only cares about their own needs rather than keeping our government system from collapsing as it did in Detroit. Chicago is being compared to Detroit as it is also bankrupt and has the highest crime rate in the country.

  • In reply to Terri Lee Ryan:

    Entitlements? How about restricting them to citizens only.
    A pension is not an entitlement; it is an annuity based on an employment contract.

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    Please expand your sources for pension information beyond anti-union, anti-government, pro-1% -to-hell-with-everyone\-else organizations that masquerade as "free-market think tanks." They are lying to you.

  • Entitlements? I suppose you would leave out the ones that benefit you--like how much gas would really cost without the government subsidizing the oil industry.

  • Pensions will be a thing of the past. For those of you that still have one be happy you get it. Our government can not afford to pay them. They will have to take money from other areas to support our government. Really, we need better politicians that can balance a budget and be accountable for their actions.

  • fb_avatar

    It's quite easy to call anybody a "thief" when you don't agree with what he gets paid or the pension he receives. I tell you what: just print here what your profession is and let us, or, at least me, determine whether your salary is worth it. Or, perhaps you want some general panel or board to determine the pay for everyone...or better yet, let's just make sure everybody just gets the same pay. This "private sector" and "public sector" really don't make much difference in that respect...except some of your taxes directly go to one, and indirectly go to the other. Pensions were created to help attract and keep workers. It appears that most people just want cheap labor, except when it comes to their own salaries or benefits. It's too bad most of us won't be around to witness what will happen when places like Illinois cut pension benefits: workers will naturally go to the places where the grass is greener. And then you'll be stuck with the worst of the worst-people who will be your policemen, firemen, and teachers. But many complainers won't care or couldn't care; they'll be dead. Just keep this mind, in case you haven't realized it: if the State of Illinois never paid another cent into any of the pension funds, it would still OWE the funds over 100 billion dollars. It's not the current payment for benefits that is troubling, it's the debt and interest on that debt that is the real problem. Now you want the same bunch of people who got us into this mess in the first place to solve the problem? Silly.

  • The pension funds will bankrupt the state.
    Same thing will happen in Florida, where Police, Fire, Judges & School Administrators to name a few will be collection nice pension packages. Some are double & tripling into the state pension fund for holding several govt. positions.

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