By Bill Zettler
While most Illinois taxpayers' retirement wealth decreased markedly in 2008, retired Illinois public employees had no such problem. In fact almost all of them received increases of 3% this year even though pension investments cratered.
In fact the TRS (Teachers Retirement System) reported investment losses of $14 BILLION between June 2007 and November 2008. Of course that $14 billion is meaningless to public employees because they are liable for exactly none, zero, nada of the loss. All $14 billion has to be made up by the taxpayers through higher taxes.
Before this market crash we had estimated that Illinois taxpayers were on the hook for about $1 Trillion, or about $200,000 per Illinois household, over the next 37 years assuming a 6.5% investment return and health insurance increases of 9% per year (see here).
Now that number has to be bumped up to at least $1.2 trillion or $240,000 per household. So your retirement INCOME is going to go DOWN while your retirement TAXES are going to go UP. Public employees retirement only goes up, it can never go down no matter how bad the economic times.
The top two pensions in 2008 were over $379,000 and $368,000, giving Illinois the dubious distinction of having two retired public employees with pensions over $1,000/day.
That means these two former state employees receive a DAILY pension approximately equal to the average MONTHLY Social Security payment of $1,054. To give you an idea of what that pension is worth think about it this way: in order to receive $379,800 in interest each year you would have to buy a CD worth at least $7 million.
In 2008 the State of Illinois continued to make tens of thousands of pension millionaires out of retired public employees with the taxpayer picking up the tab. Here are some more disturbing pension facts:
- In 2008 at least 3,195 former public employees had pensions of over $100,000, up 27% from 2007's 2,535. Here is the Top 100 list.
- Four had pensions of over $300,000 and 40 had pensions of over $200,000.
In 2008, 56 former public employees had pensions greater than President Clinton. That is up a stunning 70% from 2007.
For the first time the average pension of the Top 100 exceeds $200,000.
For the first time you need a pension of at least $171,000 to even make it into the Top 100.
94 of the 100 were University or K-12 employees meaning they probably spent the majority of their careers working 9 months a year with tenure.
$100,000/yr public pensions is one of Illinois few growth industries. Since 2002 they have been growing at 25% per year. Based upon current growth rates we will be paying for over 10,000 $100,000 pensions by 2012.
Only one was a former politician, Arthur Berman.
Over 535 state pensions had MONTHLY payments greater than average Social Security ANNUAL payment of $12,648.
Breakdown by pension fund:
K-12 Teachers (TRS) = 1,250
University Teachers (SURS) = 1,235
State Employees (SERS) = 505
Municipal Employees (IMRF) = 91
Chicago Teachers (CTPF) = 114
Another way to look at it is the top pension is 30 times the amount the average Social Security recipient receives and 12 times the median wage of the average full time Illinois worker ($32,864).
Why do average people, most of whom do not have enough money for their own retirement, have to pay taxes to buy the equivalent of a $7 million CD for one public employee?
If these former Illinois Public employees had been on Social Security and a 401K program during their working years (like the rest of us) taxpayer liability for state employees retirement would be zero as opposed to $1.2 TRILLION taxpayers will have to pay in taxes over the next 37 years for public employee pensions and health insurance. That's $1.2 TRILLION ($240,000 per Illinois household) they will not have available for their own retirement.
Both fairness and finance demand pension reform in Illinois.