Findings from TUA’s Illinois pension project are featured at the Illinois Policy Institute website.
Illinois’ current unfunded state government pension liabilities total approximately $200 billion under Moody’s Investors Service’s new methodology.
The Illinois Policy Institute estimates that the state’s pension funding ratio is currently less than 25 percent, meaning the state has the worst-funded pension system in the nation.
Buried within this massive financial obligation are thousands of current retirees earning six-figure pensions.
The top 100 retirees alone are estimated to collect $623 million in pension payments throughout their lifetime, according to data from the Taxpayers United of America. More than 9,900 current retirees collect more than $100,000 annually in pension. That number is expected to grow to 25,000 pensioners collecting more than $100,000 each annually by 2020.
Some top pensioners will collect more than 100 times the amount they contribute to the system throughout their lifetime.
In addition to their six-figure pensions, these retirees are also guaranteed compounded 3 percent annual cost-of-living adjustments, or COLAs – which function as automatic raises that make the system even more unaffordable. These generous benefits are pushing the state’s pension system closer to the edge.
Illinois’ pension system is already unsustainable and nearly insolvent. Paying out 3 percent compounding COLAs on top of six-figure pensions will only collapse the systems sooner.
Illinois must modernize its retirement system.
The Illinois Policy Institute has put together a plan that does just that. The solution cuts unfunded pension debt in half and includes a defined contribution plan as the main pillar of its reforms while protecting already-earned benefits for government workers. It can be found in House Bill 3303 and Senate Bill 2026.
