10 Things You Probably Don’t Know About IL State Pensions.

They say that knowledge is power.  That being the case, this list of Ten Things you probably don’t know about Illinois State pensions is packed with enough information  to make Illinois taxpayers realize what really ails our state pension system.  Regardless of what the “professionals” say, pouring more money into this costly, corrupted, and failed system is the LAST THING we need to be doing!

  1. Taxpayers have contributed more, not less, than the 1995 50-year pension funding law required.  Most people are familiar with the 1995 pension funding law that set up a schedule of payments that would result in 90% pension funding by 2044 for all the state pension systems. The schedule of state payments given to us in 1995 has been exceeded. So why are we being told we have to pay more when we have already overpaid?  Read more: “Politicians and Unions Lied To Us in 1995 and Have Been Lying to Us Ever Since.”
  2. Since 2001, taxpayers have contributed 230% more than teachers to the Teachers Retirement System.  The most vociferous group in demanding more from taxpayers are teacher unions and their members. Hardly a day passes without a strident claim by a teacher or union honcho or one of their many political lackeys that the taxpayer (AKA the state) has not made their contribution while the dutiful teachers always make theirs. Good job by the unions convincing their membership but unfortunately for them it is patently not true.  Read more: “Taxpayers Have Contributed 230% more than Teachers Since 2001”.
  3. Less than 1% of state retirees worked 40 years.  If you work in the private sector from age 22 to 62 and retire on early Social Security at a maximum of $22,000 you will have worked 40 years. It is extremely rare for state workers to work that long in spite of the large pensions. In fact the Top 100 Pensions average only 31 years work in IL for their average $227,000 pension. And educators are not the only employees with a good deal. Most state employees (SERS) who work at least 40 years will have retirement income greater than their final salary take-home-pay (pension plus Social Security).  Read more: “Average State Pensions Are Far Above Average Part 1”.
  4. The supposedly “modest” average state pensions are worth 4 times Social Security.  The word “modest” is used by media, union members and politicians to describe IL state pensions in order to minimize the huge cost to taxpayers. But when you look closer you find that the average state employee works less than 25 years and in more than half the cases only 9 months a year (educators). So why are pensions worth 4 times Social Security for 9-month employees working partial (25-years) careers considered “modest”? The highest pensions are 8 to 10 times Social Security.  Read more: “Average State Pensions Are Far Above Average Part 2”.
  5. State retirees have used more than 132,000 years of sick-leave credit to receive extra pension without actually having to work for it.  Employees in the state pensions can accrue sick leave at the rate of 10 to 15 days per year and use them as “work years” when they retire. In TRS a “work year” is only 170 days (34 weeks) so in about 20 years or so a teacher will have the maximum two years already accrued well before they retire. In some school districts sick days are given away or can be purchased outright at the time of retirement for $20/day. I show an example of a teacher who paid $6,800 at her time of retirement for 340 days (2 years) sick leave credit that boosted her pension by $4,800/year.  Read more:   “Retired Teachers Getting Pensions for 157,700 years They Never Worked”.
  6. Over 44,000 retirees have annual pensions greater than their total contributions over their entire career.  This is an indication that employee contributions are much too low. As a comparison, the maximum Social Security at age 62 is $22,000 after about $130,000 in employee contributions over the recipient’s career. So even if you lived to age 125 with cost-of-living-adjustments your annual Social Security would never exceed your contributions.  Read more: “Should Public Employees Have Pensions Greater Than Their Career Pension Contributions?”
  7. The reason TRS pension liability is so high is because teachers are vastly overpaid compared to adjoining states.  The way IL pensions are calculated a doubling of salary results in a doubling of pension payments. The top teacher salary in IL for 2011, $203,000 for a suburban Phys-ed teacher, is $108,000 more than the top teacher in Kentucky. It is also $95,000 higher than WI, $92,000 higher than IA and $83,000 higher than MO highest teacher salaries.  Read more: “Why Is Illinois’s Top Teacher Salary $108,000 More Than Kentucky’s?”
  8. If IL teachers had the same salary and pension schedule as Wisconsin, we would save more than $4 billion/yr. enough to make the annual pension payment.  WI teachers (and administrators) have much lower salaries than their IL peers and their maximum pension is not reached until age 65. If the same rules applied to IL we would save $4 billion/yr. even including the Social Security cost associated with WI.  Read more:  ”IL School Administrators Make 67% More than Wisconsin’s”
  9. If the pension rules in effect in 1970 when the “Pension Guarantee” was added to the state constitution were still in effect there would be no unfunded pension liability.  In December 1970 the phrase “shall not be diminished or impaired” was added to the IL state constitution guaranteeing pensions for state employees. One month later in January 1971 new laws were passed increasing pension benefits by 11% to 53%. Boy, that didn’t take long.Pension benefits were increased by another 17-30% in 1998.  Read more: “IL Pensions: More than 130 benefit increases since 1970 are the major cause of unfunded liability.”
  10. Teachers’ unions have given IL politicians of both parties more than $50 million in contributions since 1995.   Unions give politicians $10’s of millions and get $10’s of billions back in increased pension benefits. Rod Blagojevich gets $1.8 million from teacher unions then pushes $10 billion pension bond thru the legislature.  Read More:  “Teacher Unions Give Politicians $10’s of millions in Contributions, Politicians Give Teacher Union Members $10’s of Billions in Benefits.”

1 Comment

  • Wolf says:

    The Public Sector Pensions are a complete fraud on the taxpayers. It can be seen in every Public Sector Labor Agreement were the exorbitant payout is inflated by over 40% in the final years before retirement. The actual payout of 85% or more of the final salary does not reflect any conservative investment and contribution principles and based on conservative calculations could not exceed $44K annually. The Social Security payouts of $10K to $26K is totally earned if the lifetime contributions had been invested at a risk-free rate and should be available for ones entire retirement without any problems. The Pension fraud in the Public Sector has put a $50 Trillion obligation the taxpayers for these millionaire pension plans that is right millionaire pension plans. Just ask yourself what is required to payout over $80K annually at a 4% risk free return for a retirement of 40 years plus. The solution is immediate reform were all the member 35 years or older get $50K annually maximum more than deserved and everyone else will be put into Social Security, Medicare and a self-directed 401K with a 3% match maximum…Unfortunately the fraud and collusion here is so self-serving all the politicians and the Public Sector members and unions that internal reform is impossible without either complete default of the nation, state or municipality or a 2nd American Revolution.

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