Pensions Myths and Vampires: They Both Refuse To Die

Both are impervious to logic and facts: Perhaps garlic would work?

By Bill Zettler

An unending cascade of misinformation continues to come out of Springfield, union headquarters and the media so let me say it loud and clear:

We Taxpayers Have OVERPAID Into Pensions Not UNDERPAID.

Let’s keep it simple:

Is $19 billion greater than $13 billion?

If the answer is “Yes” then we taxpayers have paid $6 billion more for teacher pensions from 2000-2010 than we were told we would have to pay in 2000. That’s 46% MORE than we should have had to pay.

The way I look at it the taxpayers are due a refund with interest.

It’s as if during the Bears-Packers game we went 46 yards past the goal-line for a touchdown and the referees’ said, “Oops forgot to tell you this is a 200 yard field.”

If that happened Dick Butkus and Mike Ditka would dismember the referee and start the game over. And that’s exactly what we need to do with the pension system in Illinois: dismember it and start over.

Similarly if your mortgage payment was $1,200/mo. and you paid the bank $1,700/mo for 10 years you would think you had paid down your balance. But then the bank called and said “You know what your payment was really $2,000/mo and now you owe us back payments plus interest at 8.5% on the past due amount.” This kind of illogic is impossible anywhere except in Illinois pension politics.

NOTE: The other four state pension systems have similar or worse numbers. I am using the Teachers Retirement System as an example because it is the largest by far. See table at end of article for details.

Why were the “experts” wrong in their estimates?

By “experts” I mean all of those with something to gain: teachers, union bosses, pension trustees, consultants, actuaries, lawyers, bond salesman, investment advisors, various and sundry boot lickers and, of course, politicians.

They were wrong because there was no price to pay for being wrong. When they are wrong the taxpayers are expected to pay the price: ever increasing taxes into perpetuity.

We talked about why and how it was pulled off in this article: Illinois Pensions and Intergenerational Theft.

We have an example of an $189,000/yr music teacher who pulls down a $130,000 pension at age 55 after contributing less than a self-employed music teacher would contribute to Social Security for a pension of $21,000 at age 62 here: Teacher Contributes Less for His $130K Pension Than You Do for Your $21K Social Security.