WGLT | National Taxpayers United campaigns against state pensions

Findings from TUA’s pension project on Bloomington-Normal, Illinois, are featured in this story from WGLT.
The head of a conservative anti tax group is publishing pension benefit amounts for retired McLean County teachers and government officials.
“And the biggest problem with Illinois’s catastrophic financial system are these lavish gold-plated pensions.”
Jim Tobin, the head of National Taxpayers United, says eliminating defined benefit plans and putting all new government workers into 401k accounts is necessary to rescue the state from fiscal crisis.
But, representatives for workers point out the group’s allegations of pension millionaires assume that retirees will live to age 85. Most don’t. They also accuse NTU of cherry picking data and using only top earners as examples, not the average retiree who receives between $32,000 and $46,000 depending on which union workforce is involved. Larry Alferink heads the ISU Annuitants Association and says state pension costs are not exhorbitant when taken as a portion of total compensation.
The cost of the pension system to the state of Illinois was 9.1%, recognizing that the cost of social security is 6.2%. So the actual cost of the pension system above what every other employer pays is less than 3%.
State employees, Alferink says, do not get Social Security and the state does not pay into that system for its employees. Alferink says private universities average at least 5% retirement costs above the 6.2% of compensation they contribute to Social Security. Alferink also notes the state’s problems stem not from the size of the pensions but from the state’s failure to pay its share of the costs over decades.
During the anti pension campaign stop in Bloomington Tobin said recovery will require Illinois to convert state workers to 401k accounts moving forward.
“They have to stop the government pensions for new government hires. That will eliminate all unfunded liabilities in the long run”
Tobin also wants the retirement age raised to 67 and workers in the current plan to pay 10% of their income toward retirement. Alferink says 401k systems typically do not work out so well.
“One out of every six people outlive their benefits and then they have to fall back on the state. In this case, since the state is paying for the pension system it doesn’t work out so well because they end up paying a second time when those individuals are destitute.”
Tobin’s group likes to claim that only 2% to 4% of lifetime pension benefits are paid by direct state employee contributions. But, Alferink notes that is misleading because nearly 70% of pension payments come from earnings on worker contributions over decades.