Annuity Contribution Chart: Teacher 8.4% vs. Employer 31%

Assumes 8.5% Return Compounded per TRS Actuarial Assumption.

Assumes Starting Salary 34 Years Ago was $12,000 Increasing at 6.5%/yr
(Teacher Retirement System Assumes 6.5%).

Annual Salaries Years 28 to 34 Are From Il. Dept. Education Electronic

“Cash Value of Pension At Retirement” = Prepaid Annuity Female, 56, Indexed
for Inflation, Life Only (no Survivor Benefits).

Beginning Pension = sum of 4 highest Years, divided by 4 ,multiplied by 75%
= 83,775.

Cash Value of Pension at Retirement = Cost of Prepaid Annuity Providing
$83,775/yr for Life = 1,954,161.

Cash Value of Pension at Retirement If Teacher Pays 8.4% of Salary, Taxpayer
Pays 31% of Salary = 1,971,142.

NOTE: Teachers pay 9.4% but 1 % is for survivor benefits which is not
included in the PrePaid Annuity.

NOTE: Teacher Contribution Rate was 7% prior to 1998 so these results are
conservative since they assume 8.4% for all 34 years.

Example From District 300 Teacher Who Retired in 2005.

Bill Zettler is a free-lance writer and consultant specializing in public sector compensation.