Pension Reform

Journal Standard|Letter: Illinois state employees should be on the 401K system

Taxpayers United of America’s study was mentioned in a letter by Bill Dietz to the Journal Standard.


 

Illinois’ public unions need to join the private-sector-style pension system. Normally, we think of teachers, firemen and policeman, but Illinois has 13 public unions — 64,459 workers — that gave $48.5 million to political campaigns.
The individuals are not the main culprits, but the head unions and the politicians that they finance are. Hence, the reason the politicians do not insist on a 401K-style donation pension system rather than the one we have now. With a pension debt of over $100 billion, this must change or Illinois could be the first state to file bankruptcy. The monthly pension obligation is $560 million, which is 20 percent of Illinois spending. Taxpayers United of America study shows there are 12,154 Illinois government retirees collecting over $100,000 per year and 85,893 receiving over $50,000 per year with a 3 percent compounded cost-of-living adjustment increase every year. Most recipients get back all of their input cost between one and three years.
If we could have the state pension and health care reform that Gov. Bruce Rauner and Republicans want, then we would not constantly hear of Highland College’s, Stephenson County’s or Freeport’s needs for more taxes. Most of the private sector is on a 401K-style pension system. Is it too much to ask that new employees of the state be on the 401K system? With all things considered, we the people should now be called the public servants.
— Bill Dietz, Lena

Effingham and Jefferson County Gov. Pensions Consuming Taxpayers’ Dollars

View as PDF Effingham, IL—Taxpayers United of America (TUA) today released the results of their study of the government pensions for Effingham and Jefferson Counties, as well as Effingham and Mt. Vernon municipal and local government schools.
“Well over 500 government retirees in Effingham and Jefferson counties will receive multi-million dollar pension payouts over the course of their lifetime. Thirteen government retirees currently collect pensions in excess of $100,000 annually and 341 receive annual payouts greater than $50,000,” stated Jim Tobin, TUA president. “The pensioners’ average personal investment is only about 5.4% of the lifetime pension payouts.”
“While taxpayers work well beyond retirement age to keep their families afloat, these government pensioners enjoy lavish, gold-plated retirements beginning, on average, at the age of 58. In fact, according to our data, more than 500 of the government retirees in Effingham and Jefferson counties retired in their fifties, and in some cases, decades before average taxpayers can consider retirement.”
“The sheer number of government pensioners in Illinois, not to mention the amount of taxpayers’ dollars they collect, is staggering,” said Tobin. “Consider that the taxpayers who fund these government pensions receive Social Security benefits of only about $15,000 a year on average. This year, nearly a third of Illinois’ 100,689 retired government teachers collected pensions higher than their average highest pay while employed. Their pensions averaged $9,674 above the final average salaries of those retirees, totaling nearly $294 million.”
“House Speaker Mike Madigan (D) is once again calling for hiking Illinois’ personal and corporate income tax rates in an attempt to solve the state’s financial woes he created, but he and his aligned cronies won’t tell the truth about how your tax dollars are spent. Madigan and his partisans won’t tell you that their last 67% income tax increase was a complete failure. The 2011 income tax hike collected nearly $32 billion for the Illinois state government, but almost 90% of those funds went into the government pensions and the crisis is nowhere near averted. And to make matters worse, local governments are continuously seeking to raise property taxes – and it’s not ‘for the children!’ as we are incessantly told. In reality, nearly 80% of local taxes go to fund salaries and benefits of government employees. Between the state and local government revenue schemes, taxpayers have much to worry about financially.”
“There are now well over 12,154 Illinois government pensioners collecting more than $100,000 annually and 85,893 government pensioners collecting more than $50,000 annually! And these numbers only pertain to the state pension funds and don’t include any of the hundreds of local police and fire pension funds, so the financial trouble Illinois is facing is even more shocking.”
“Retired Mt. Vernon School District 80 government employee, Kevin L. Settle enjoys an annual taxpayer funded pension of $126,133. Over a normal lifetime, he will get about $4.8 million in pension payments. His personal investment in this rich pension is about 4.3% or $207,616.”
Gary D. Duncan retired from the Jefferson County government and his current annual pension is $131,953. He will collect about $3.5 million while he only put in $177,218 of his own money, slightly more than one year’s pension payout. That’s a 5% investment in his own multi-million dollar retirement payout!”
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“The best solution for government pension reform in Illinois, although difficult, would be the repeal of the Illinois Constitution’s pension provision protecting them from being ‘diminished or impaired.’ In the meantime, the Illinois General Assembly should increase individual government employee contributions to their own gold-plated pensions by 10 percentage points. This would save taxpayers about $150 billion over the next 35 years, or about $4.3 billion a year, and save Illinois from financial ruin.”
“Right now, most government school teachers don’t pay the 9.4% required contribution to their own pension, and taxpayers in those school districts pay a portion or all of the teachers’ pension contribution through higher property taxes. Having employees make the required contribution would save taxpayers roughly $500 million in property taxes annually. And if all else fails, there is always the option of moving forward with legislation to begin the process of allowing municipalities and government schools to file for Chapter 9. Taxpayers must pursue these paths forward and any other options that reverse the course toward disastrously higher taxes in the immediate future,” said Tobin.
“Rather than finding ways to perpetuate this horrible system that places copious amounts of cash in the hands of bureaucratic hacks, rank and file government pensioners should be calling for the complete reform and conversion to 401(k) style defined contribution pension funds that place employees in control of their own futures. How many times will we trust politicians to ‘do the right thing’ with the tax money collected for pensions?”
“The choice is clear: without sweeping, meaningful pension reform, residents of Effingham and Jefferson counties, and nearly every other part of Illinois, will have to choose between fully funding the pension systems to pay for past services rendered, or pay for the services we need today,” concluded Tobin.
*Lifetime estimated pension payout includes 3% compounded COLA and assumes life expectancy of 85 (IRS Form 590).

Suburban Government Pensions Smothering Taxpayers

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Chicago, IL—Taxpayers United of America (TUA) today released the results of their study of the government pensions of municipal and government school retirees for Des Plaines, Elk Grove Village, Glenview, and Schaumburg.
“More than 1,000 of the government pensioners in these four communities alone each receive greater than $100,000 per year in pension payments, and greater than 2,500 collect pensions between $50,000 and $100,000 annually,” stated Jim Tobin, TUA president. “The pensioners’ average personal investment is only about 5.3% of their lifetime payouts.”
“The government pensions are unsustainable. Illinoisans continue to see services cut, programs defunded, and their earnings confiscated as tax dollars are diverted from services required by today’s taxpayers into the pension funds for government employees whose services were rendered long ago.”
“These lavish government pensions are political tools for politicians and union bosses and sustaining the defined benefit system will only be a detriment to employees and taxpayers in the future. On average, these gold-plated retirements begin at the age of 58. The retired government teachers alone average over $2.2 million in lifetime pension payments! The ballooning unfunded liabilities are smothering Cook County taxpayers, and all of Illinois, for that matter.”
“These ‘poor public servants,’ who collect more in pension payments than the taxpayers who fund them, enjoy nearly iron-clad job security and guaranteed increases in wages and retirement. This is theft. This is immoral and unethical theft of taxpayers’ hard-earned money to be given to the political elite. Putting vast sums of money in the hands of bureaucrats and politicians is always a frightening idea,” said Tobin.
“Schaumburg fire and police pension funds are some of the largest in the state and at 58.1% and 53.9% funding ratios, respectively, they illustrate the dire need for immediate and sweeping reforms to remove this unbearable tax burden from the backs of hard-working taxpayers. Because when the pension funds run short, and they will, and someone needs to make up the difference, who will be left on the hook for these exorbitant government pensions? The taxpayers.”
“There are now well over 12,154 Illinois government pensioners collecting more than $100,000 and 85,893 government pensioners collecting more than $50,000 annually! These numbers only pertain to the state pension funds and don’t include any of the hundreds of local police and fire pension funds. Those are staggering numbers, considering the taxpayers who fund these government pensions get an average Social Security pension of only about $15,000 a year.”
“Retired Schaumburg CCSD 54 government employee, M. Moshin Dada enjoys an annual taxpayer funded pension of $262,341. Over a normal lifetime, he will get about$8.8 million in pension payments. His personal investment in his rich pension is about4.2% or $371,514 – less than two years’ of the government pension benefits he collects!”
Thomas J. Richardson retired from Glenview Park District and his current annual pension is $130,322. He will collect about $4.2 million, while he only put in $112,977 of his own money, less than one year’s pension payout. That’s a 2.7% investment in his own multi-million dollar retirement payout!”
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“I defy teachers, or any government employee, to look into their neighbors’ eyes and say, ‘You deserve another pay cut so I can make more in retirement than you make working.’ They have to be able to say to their neighbors, ‘I don’t care if you can no longer afford your home property tax payment; I want more. I want more of your money. I want more of your wealth. I want more of your property.’ That is the reality of demanding more lavish government pensions,” challenged Tobin.
“The best solution for government pension reform in Illinois, although difficult, would be the repeal of the Illinois Constitution’s pension provision protecting them from being ‘diminished or impaired. In the meantime, the Illinois General Assembly should increase individual government employee contributions to their own gold-plated pensions by 10 percentage points. This would save taxpayers about $150 billion over the next 35 years, or about $4.3 billion a year, and save the State of Illinois from financial ruin.”
“Right now, most government school teachers don’t pay the 9.4% required contribution to their own pension, and many school districts pay a portion or all of the teachers’ pension contribution. Having employees make the required contribution would save taxpayers roughly $500 million annually. And if all else fails, there is always the option of moving forward with legislation to begin the process of allowing municipalities and government schools to file for Chapter 9. Taxpayers must pursue these paths forward and any other options that reverse the course toward disastrously higher taxes in the immediate future,” said Tobin.
“Rather than finding ways to perpetuate this horrible system that places copious amounts of cash in the hands of bureaucratic hacks, rank and file government pensioners should be calling for the complete reform and conversion to 401(k) style defined contribution pension funds that place employees in control of their own futures. How many times will we trust politicians to do the right thing with the money collected for pensions? How many citizen groups will ‘discover’ that you just can’t tax your way out of this problem?”
“The choice is clear: without sweeping, meaningful pension reform, residents of Cook County suburbs and nearly every other city in Illinois will have to choose between fully funding the pension systems to pay for past services rendered, or pay for the services we need today,” concluded Tobin.
*Lifetime estimated pension payout includes 3% compounded COLA and assumes life expectancy of 85 (IRS Form 590).

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Taxpayers United Of America: (TUA). is a nonpartisan, 501(c)(4) taxpayer advocacy group. Founded June 27, 1976 in Chicago, Illinois by activist and economist Jim Tobin, TUA works on behalf of taxpayers to reduce local, state, and federal taxes. In the past forty years, TUA has saved taxpayers more than $200 billion n taxes and has become one of the largest taxpayer organizations in America. Check All posts. s.

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