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Aledo Times Record - Aledo, IL
  • Blog: When will the whining end and the reforming begin

  • When will the whining end and the reforming begin?



    That’s what kept running through my mind this past week as I listened to politicians, union
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  • When will the whining end and the reforming begin?
     
    That’s what kept running through my mind this past week as I listened to politicians, union
     
    leaders and government employees talk about the state’s pension woes.
     
    None of the plans Illinois lawmakers are considering will go anywhere near solving the state’s
     
    long-term pension crisis.
     
    And yet even the most modest proposals have government workers angry.
     
    For example, I read this in a central Illinois newspaper the other day:
     
    ‘’’My wife and I planned carefully for retirement and left a sensible cushion,” said
    retiree John Kilgore, who taught English literature at Eastern Illinois University from
    1978 to 2010. His wife, Dollie, was a nurse at the student health center, and both
    receive pension benefits through the state’s university retirement system. Kilgore
    said any pension reform adjustments to medical insurance or the pension’s COLA
    provisions ‘is more than our budget can stand.’”
     
    A pensioner facing poverty?
     
    Hardly.
     
    Kilgore collects an annual pension $91,692.
     
    He retired two years ago at age 58.
     
    He’s making more retired than most Illinoisans can ever expect to make working.
     
    And those working Illinoisans are the ones being asked to pay for his pension.
     
    In 2011, the Illinois Legislature jacked up income taxes by 67 percent – and nearly every dime
     
    of it went to cover pensions. That’s the equivalent of an extra week of pay being taken away
     
    from every working Illinoisan.
     
    Taxpayers are finding it hard to save for their own retirements because they are busy paying for
     
    someone else’s.
     
    It’s time for the state to get out of the pension business altogether. Eighty-five percent of us in
     
    the private sector have 401k-style retirement plans, after all.
     
    Why not government workers, too?
     
    I have a whole lot more confidence in individual workers making smart investment decisions for
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    themselves than I do in politicians making decisions for them.
     
    The transition from defined benefit to defined contribution plan has happened in industry after
     
    industry. Tragedy did not follow.
     
    Pensions are based on the idea that workers can be guaranteed a certain benefit in retirement.
     
    But that is a fundamentally flawed idea because no one has crystal ball to predict life
     
    expectancy, future investment returns, possible inflation rates and a host of other factors.
     
    And in the case of state government, the biggest variable is the politicians themselves – no one
     
    can predict what retirement benefits future politicians will promise government employee unions
     
    as they seek votes and campaign dollars.
     
    A 401k-style plan is superior because it gets the state out of the business of predicting the
     
    future.
     
    It also empowers workers to make investment decisions for themselves.
     
    Pensions are a vestige of a paternalistic culture where the boss knows best – not only for your
     
    work hours but for your golden years.
     
    As Illinois has clung to its outdated pension system, the state has sunk deeper and deeper into
     
    debt.
     
    Illinois has the largest unfunded pension liability in the nation and Moody’s Investors Service
     
    gave Illinois the worst bond rating of any state in the country.
     
    It time for the state to step away from pensions altogether.
     
    Scott Reeder is a veteran statehouse reporter and the journalist in residence at the Illinois Policy
    Institute. He can be reached at: sreeder@illinoispolicy.org. Readers can subscribe to his free political
    newsletter by going to Reederreport.com.

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