The Illinois Supreme court rulings overturning all attempted pension reforms for current retirees and employees means that any real pension fix will require an Illinois’ Constitution amendment and most likely an agreement with the government-employee unions. Two suggestions that I (Jan Shaw) have been making are:
- Tie any Cost of Living allowance (COLA) to inflation and the health of the fund. No COLA if doing so would result in the fund being less than 100% funded. And cola should never exceed inflation.
- Many pensions are out of line. Based on 2013 data, we discovered that the average starting pension for a recently retired teachers who worked 30+ years ($70,894), exceeded the average pay for active teachers ($67,558). Cap pensions at a reasonable amount (set $ amount or percent of the maximum salary for which social security is taken).
In order to get a handle on how much could be saved if pensions were capped, I copied data from
The “TRS – Comprehensive Annual Financial Report” made a few basic assumptions and ran some what-if scenarios.
For 2014, the data is on page 104 (of the pdf) http://trs.illinois.gov/pubs/cafr/FY2014/fy14.pdf
For 2015, the data is on page 109 (of the pdf) http://trs.illinois.gov/pubs/cafr/FY2015/fy15.pdf
The charts group retirees based on years of service and how long since retirement. For each group they show the number of Retirees, the Average current benefit, and the Average original benefit. For my estimates, I assumed that all retires in each group receive the average. Thus the number of retirees affected based on my computations may be higher than the actual number but the $ savings should be accurate.
These savings are based on TRS data only. Other pension plans would also have savings.
|if capped at $50,000|
|if capped at $55,000|
|if capped at $65,000|
For another data point, see Tax Payers United of America’s “10TH ANNUAL REPORT ILLINOIS STATE PENSIONS” report. http://www.taxpayersunitedofamerica.org/wp-content/uploads/10th-annual-report-illinois-state-pensions-WEB.pdf
According to it:
15,661 state pensioners each collect more than $100,000 annually
- GARS – 51
- JRS – 636
- TRS – 9,596
- SURS – 3,955
- SERS – 880
- IMRF – 543 92,386
state pensioners each collect more than $50,000 annually
- GARS – 158
- JRS – 741
- TRS – 56,111
- SURS – 15,628
- SERS – 13.960
- IMRF – 5,788