Illinois needs pension reform
By Bill Zettler
My new slogan “Give ’em a million and save a billion” comes from a simple mathematical fact. The average teacher in Illinois who retires after 34 years retires with a pension worth well in excess of a million dollars cash. So if we taxpayers just give them a check for $1 million when they retire…we will save tens or hundreds of billions over the next 40 years.
This is easy to figure out just go to any mutual fund site such as www.vanguard.com and have them calculate an annuity for you indexed for inflation starting at age 55. When you do that you see that a beginning pension of $40,000/year requires an up-front payment of $1 million.
Thus the $103,000 pension for the highest paid teacher in 2004, a driver’s ed teacher from Leyden High School is worth about $2.5 million cash up front. So giving him $1 million would save us $1.5 million and still make him a millionaire.
He is not alone — the100th highest paid teacher would have a pension cash-value of about $2 million. Suffice it to say that there are no teachers in the six-county metro area retiring at age 55 after 34 years that are retiring on pensions less than $1.25 million. Most of them are close to the $2 million mark. If they are administrators the $3 million mark is not unusual.
And the teachers’ 8-percent contribution over 34 years compounded at 6 percent adds up to about 15 percent of their pension. The other 85 percent comes right out of the taxpayers’ pocket. Which also means we taxpayers as employers are contributing about 40 percent of theteacher’s salary to their pension plan. How’s that compare to yourcompany’s 401(k) contribution?
And the driver’s ed teacher is not the worst example. Bill Clinton’s presidential pension is about $162,000 per year. Here in Illinois we have 29 former public employees with pensions greater than the president’s.
We need pension reform in Illinois. We need to have an upper limit on public pensions that relate in some way to theaverage pension non-public employee’s receive.
Click on the following links to learn more about taxpayer funded public school pensions:
Recently the Family Taxpayers Foundation received an email from Assistant Professor at the University of Virginia’s School of Finance. In his email he questioned the assumptions made in some of the projections of Illinois Taxpayers Pension Liability for the Teachers Retirement System (TRS) as calculated in some of my spreadsheets.
The real issue is not investment return rates. It is the inherent unfairness of one group of people having to guarantee that rate for another politically connected group of people, i.e. public employees. Common sense fairness dictates all citizens should share the risk of economic benefit or detriment equally...
Tenure for public employees salaries while they are working is bad enough but pension tenure guaranteeing them an investment return is unfair, unacceptable and financially impossible long term. Social Security and 401K’s for all employees, public and private, is what’s fair and necessary.
The taxpayer-funded Illinois growth industry - $100,000+ public pensions - here are just the top 100
February 18, 2008
Does your employer contribute $69,000 a year to your 401K retirement plan?
February 8, 2008
Top 100 Administrators Total Compensation Year Ending June 30, 2006
February 8, 2008
Is $224,000 per Year Too Much Compensation for a Driver's Ed Teacher?
January 18, 2008
Is $224,000 per Year Too Much Compensation for a Driver's Ed Teacher? - SPREADSHEET
January 18, 2008
Dist 211 Teacher Salaries 2003 - 2006
November 6, 2007
Teacher Unions and the New math: 20% is 10%
November 6, 2007
26 Million Reasons Why We Need to Reform Illinois Public Pensions
October 17, 2007
Curley - Teacher Pension Calculator
Hintz - Teacher Pension Calculator
Catalani - Teacher Pension Calculator
October 17, 2007
Pension Contribution: Employee 8.4%, Employer 31% (or maybe 46%)
September 28, 2007
Annuity Contribution Chart: Teacher 8.4% vs. Employer 31%
September 28, 2007
If Warren Buffet is Right: Average Investment Return Is 6.5% not 8.5%
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"We Have Met The Taxpayer and He Is Us"
July 31, 2007
If General Motors can go Bankrupt, why can't Illinois' Public Schools?
July 2, 2007
"Moral Imperative" - Public Pension Tax Relief for All Illinois Families
June 3, 2007
ABC News: Six-Figure Public Employee Pensions
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Top 100 Illinois Taxpayer Funded Pensions
April 18, 2007
Candlelight Vigil for Taxpayers
April 12, 2007
$1,000 Per Day Pension for Former State Employee; Illinois Top 100 Pension Payouts 2005-2006 Fiscal Year
February 19, 2007
How much should a teacher make? A private sector equivalency calculation
February 16, 2007
What $54,000 really means for a teacher
February 14, 2007
The need to "Recalibrate" Pensions
February 5, 2007
Top 2005 State pension = $357,800
January 10, 2007
Introducing the "Golden Handcuff Award"
October 2, 2006
35% Not Enough: Grant High School Teachers Threaten Strike
September 12, 2006
The "Big Lie" in Education Funding
June 20, 2006
Illinois teachers pay relative to other degreed white-collar workers
June 20, 2006
Illinois Top 100 Pension Payouts 2004-2005 Fiscal Year
June 16, 2006
Pension Liability = Teacher Retirement System = $182 Billion
June 15, 2006
Myth about teachers' salaries continues
June 10, 2006
It's time for "Taxpayers Week"
April 15, 2006
The meaning of the word "education"
March 15, 2006
"Big Ire" may be on the way
February 11, 2006
D300 program cuts v. pension boosts
February 3, 2006
Total Pension Liability for ONE School District, D300, sheet 1 of 3
Total Pension Liability for ONE School District, D300, sheet 2 of 3
Total Pension Liability for ONE School District, D300, sheet 3 of 3
February 2, 2006
Where has all the money gone in D300?
February 1, 2006
Top 100 Illinois state pensions
January 14, 2006
Where has all the District 95 money gone?
January 7, 2006
Yes, Illinois needs pension reform
December 1, 2005
