Illinois' pension solution. Tier 1 teacher retirees are dying off.
Tier 2 teachers are footing the bill.
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I’m a retired Illinois teacher for over ten years now.
Even though the state Teacher Retirement System pension is grossly underfunded and has been for years, I’ve received my monthly pension check without fail, as I should.
But I’m not getting any younger.
Nobody lives forever and the truth is that the politicians in this state are counting on our inevitable demise as a solution to the state’s pension problem.
In 2010 the legislators in Springfield created a Tier 2 for TRS members hired after January, 2011.
The Tier 2 teachers continued to pay 9% of their salary, but their benefits at retirement will be much, much worse than mine.
Current Tier 2 teachers are paying off the state’s pension debt.
The idea, not openly spoken, is that when Tier 1 teachers are all dead, the problem will be solved.
And the plan is working. It is working so well that some of the state’s lawmakers are not even waiting for our bodies to get cold before they are spending the money our deaths will save the state.
Democratic Gov. J.B. Pritzker and GOP gubernatorial nominee Darren Bailey have been arguing about that for a while on the campaign trail, with financial experts divided on how to handle what still is at least $130 billion in unfunded liability. Now a little evidence favoring Pritzker’s view is coming from state Rep. Mark Batinick, a Plainfield Republican.
Batinick this week has been publicizing a new bill that would reallocate some money from pension payments to local property tax relief.
Under the legend “Why have we turned the corner on pensions?” Batinick’s fact sheet on his plan notes that more than half of current state workers now are in the cheaper Tier 2 pension system that went into effect for those hired after Jan. 1, 2011. Beyond that, he says, the state has steadily ramped up its payments, and investment returns on those payments have increased.
Combined, that means that, as a percentage of overall state general funds (operational) spending, pension payments have peaked, dropping from over 29% a few years ago to a projected 20% or less within a decade, he says, citing state data.
Read that again.
As a percentage of overall state general funds, pension payments have peaked, dropping from 29% to 20% in less than ten years.
As Tier 1 teachers die, that percentage will get smaller and smaller.
But what about Tier 2 teachers?
Many will never stay around in the classroom until they are 67 years old, the age now required to receive their reduced pension and retiree benefits.
And that reduced pension will not likely meet the federal law known as “safe harbor.”
A public pension benefit must be as good or better than Social Security, which Tier 2 likely will not be.
Then the state or local districts will be forced to make up for the difference.
If I were Representative Batinick I wouldn’t start spending the dead retireee savings quite yet.