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?
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
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
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
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: email@example.com. Readers can subscribe to his free political
newsletter by going to Reederreport.com.