How average taxpayers pensions really compare
In the Nov. 22 Fence Post, David Urbanek of the Teachers' Retirement System states “Teachers already pay for a greater portion of their pensions during their careers in education than nonteachers pay ... Teachers contribute 9.4 percent of their salaries to TRS annually. By comparison, the social Security deduction is 6.2 percent.”
These statements are misleading and inaccurate. The true facts are as follows: Although teachers contribute 9.4 percent of their salaries to TRS annually, they pay nothing for medical while they work or in retirement. Their medical is free.
Also, teachers under the current pension system before the pension law was passed this year for new teachers, which are the bulk of teachers, have to work only for 35 years and can retire at age 55 and receive, on average, 75 percent of their salary as a pension benefit.
Therefore, assuming a theoretical salary of $75,000 per year and multiplying that salary times 9.4 percent for 35 working years for the current system, this theoretical teacher pays $246,750 in pension contributions in his or her lifetime ($75,000 X 9.4 percent X 35 years).
However, ordinary nonteachers (ordinary taxpayers) making the same theoretical $75,000 yearly salary pay Social Security tax of 6.2 percent plus Medicare tax of 1.45 percent for a total tax of 7.65 percent. And, nonteacher/private sector employees must work to age 67 to get full Social Security benefits.
Assuming a nonteacher /private sector employee starts work at 22 years old and works to 67 years old, he or she works for 45 years and pays the 7.65 percent for 45 years. This totals equals $258,187 ($75,000 X 7.65 percent X 45 years).
As you can see, ordinary taxpayers pay more toward their Social Security pensions than teachers pay toward theirs. To make matters worst, the above current teacher's yearly pension, on average, would be 75 percent X $75,000, or $56,250, starting at age 55, while the nonteacher/private sector employee's Social Security pension would be no more than $25,000 starting at age 67.
Chet Lis
Vernon Hills