How much pension should be paid to part-time employees with partial careers?
Part 2 of 2: Other pension funds are just as bad or worse than the Teachers Retirement System.
In Part 1 of this two part series we discover that the supposedly “modest” average teacher pension is 4 to 7 times greater than the equivalent Social Security pension for the same years worked and salary earned. In Part 2 we examine the other pension state systems: SURS (State University Retirement System), SERS (State Employees Retirement System), JRS (Judges Retirement System) and GARS (General Assembly Retirement System).
This being Illinois is it any surprise that the best pension deals by far go to Politicians and Judges?
How do judges compare to max Social Security recipients?
Not surprisingly judges do very well when compared to maximum Social Security recipients getting $22,000 at age 62. Keep in mind the max Social Security recipients could have earned as much or more than their retired judge counterparts. The following chart shows all judges who have received more than $2 million in pension payments along with the amount they actually contributed to those pensions.
Then I add the similar values for Social Security at the bottom of the chart.
The stark contrast between pension systems is obvious. Just looking at the averages for the judges compared to the max. Social Security recipient (an attorney in private practice perhaps) we see:
1. SS person works almost twice as long (40 vs. 22 years)
2. SS annual pension about one-third judges’ pension (128,000 to. 43,000).
3. SS total pension paid out to age 85 about one-third judges’ payout (2.1 million vs. 760,000).
4. SS person contributed 160% more to his pension than judges (130,000 vs. 78,000)
5. SS person received 6 times his contribution while judges received 29 times their contribution.
The difference is paid for by taxpayers.
Politicians arguably do best of all.
Of all politicians who have collected more than $1 million in pension benefits the average years worked is 20 and although there are none who have received more than $2 million former Gov. Jim Thompson and former state senator John Friedland will pass the $2 million mark this year.
Some of the retired politicians are still pulling down state salaries along with their hefty pension checks. Two that come to mind are former Gov. Jim Edgar whose substantial $135,000 pension is supplemented by $177,000 from the University of Illinois as a “Distinguished Fellow”. And current State Comptroller Judy Baar Topinka pulls down $150,000 pension, which is actually more than her $132,000 comptroller’s salary.
Recently the Better Government Association, in conjunction with the Family Taxpayers Foundation, did a report on politicians’ pensions.
Less than 1 in a 100 state retirees work 40 years (age 62) before drawing their pension.
What is shown here is the vastly superior nature of the state pensions compared to Social Security, the truly “average” pension. State retirees work fewer years, work shorter years and get more in pensions than the average taxpayer. Why is that?
The forces for pension bankruptcy (aka the IEA) would have you believe the “average” state pension is modest when in fact they are valued at many times what that retiree would receive if he was on Social Security. They also do not take into account that indeed, the average state pension is based upon part-time employees working partial careers as can be seen in the following table:
The problem: more than full pensions for part-time employees with part-time careers.
Less than 1 in a 100 state retirees worked 40 years or the equivalent of working from age 22 to early Social Security retirement at age 62.
Less than 1 in 11 even worked 35 years.
Over 72% of retirees are educators (TRS & SURS) and most of those worked only 9 months a year.
So part-time employees should have part-time pensions.
The solution: same plan as that of private sector workers – Social Security and 401Ks.
We can no longer afford to have two pension systems: a superior one for public employees and an inferior one for private sector employees. Public employees are not special. They do not have to be public employees if they don’t want to. So let’s level the playing field when it comes to retirement benefits.
Public employees should receive exactly the same benefits as private sector employees.
No more, no less.
Bill Zettler is a free-lance writer and consultant specializing in public sector compensation. He can be contacted at this mail address.