We Didn’t Cause the Pension Problem

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A lot of finger-pointing is going on in Illinois over the notoriously under-funded pension funds.  Just to set the record straight:

I didn’t go into teaching for the pension.  I don’t know anyone who went into teaching because they were going to get a good pension 37 years later.  We did it because we loved teaching kids.  I’ll bet $100 no kid right out college said, during an interview for their first teaching job, “So, tell me about the pension system.”

I didn’t go into teaching for the money.  I don’t know anyone who went into teaching because they wanted to make a lot of money.  My wife and I moved to Chicago in 1975 because this was the place where I found a teaching job.  I started at $11,500 per year.  I drove a school bus before and after school to help make ends meet.

The constitutional amendment guaranteeing state employee’s pensions went into effect in 1970.  Years before 99.9% of all the current educators began their career.  It wasn’t their idea to guarantee pension benefits – why is it a bad idea to do so now?

All educators paid 8% of what they were being compensated to TRS until 1999.  Then we paid 9% to TRS.  In 2005 we paid 9.4%.  Over the course of my career I paid over $300,000 into the pension system.  Using TRS’s reported investment returns, when I retired in 2012 my pension nest egg should have been about $716,000.  That’s without including any contributions from the state, which were inconsistent and underfunded.  All educators have paid what they owed.  We were not allowed to participate in Social Security.  Unless we put some of our salaries into a 403(b) account, this is all we have.

TRS states that our pension fund has $61.6 billion in unfunded liabilities – two-thirds of which is attributable to the state not paying what was needed to keep the pension fund solvent.

I get defensive when the media or people around me point their finger at teachers and accuse us of doing something dastardly.  We found a job that we loved.  We worked hard.  We paid our (TRS) dues each and every paycheck.  We worked under the assumption that the Illinois constitution protected our pension.  Why are we always cast as the bad guys?

Thanks for Your Contribution!

I was playing golf this summer and my playing partner Jim asked me how I liked retirement.  I told him it was great, and since Jim was about my age I asked him when he was going to retire.  His response was, “I have to keep working so I can pay for your pension.”

I get this a lot – friends who have heard about Illinois’ pension crisis and somehow think it’s my fault.  They don’t want to hear that 10% of my salary was automatically put into the pension system for the past 35 years.  They don’t want to hear that two-thirds of the pension system’s revenues (2013) came from its investments and member contributions, not the state.

So how much did Jim “pay” for my pension last year?  According to TRS (Teacher Retirement System) 32.4% of its revenues in 2013 came from the State of Illinois.  So that means for every $10,000 of my pension, $3,240 came from the state of Illinois.

Now according to the US Census bureau in 2013 there were approximately 9.9 million people in Illinois over the age of 18 (i.e. taxpayers like Jim).  Dividing the $3,240 that came from Illinois by 9.9 million taxpayers, that means each taxpayer contributed $.0003 per $10,000 of my pension.   According to TRS, last year the average pensioner received just under $50,000, or about $1.6 tenths of a penny per Illinois taxpayer.

So next time Jim complains about having to work to pay for my pension, I’m going to toss him a nickel – that should be more than enough to cover his contributions for the next 15 years.  Maybe now he’ll retire.

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