Facts, figures show folly of pensions

I continue to be amazed how the state legislators are breaking their arms patting themselves on the back over having “fixed” the state pension program by making a minor correction to the rules for retirement.

While Social Security is facing insolvency requiring full retirement at 67, our Illinois lawmakers seem to believe the fix is to delay state pensions until 55. Yes, the state system requires a pay-in of 9 percent versus just over 6 percent for the Social Security system, but the payout in the state system is a whopping 75 percent of final pay, often manipulated upward, while the Social Security system pays somewhere around 20 to 25 percent.

Remember a Social Security employee will pay in many years longer than the state employee. In addition, based on current longevity tables of 87 years old at death, the state pensioner will draw pension funds 12 years longer than in the Social Security system.

If you run a spreadsheet with pay-in for a state pensioner contributing 9 percent of a salary that increases over 30 years and payout based on the highest salary, plus their guaranteed increase each year, the recipient will receive somewhere more than three times what they put into a fund even if it matched the S&P 500. This disparity will have to be covered by the taxpayer.

In the case of a pensioner making $100,000 at retirement, this number covered by the taxpayer is well over $2 million.

How can any reasonable person, particularly our lawmakers who should have all this data in front of them, believe the state pension plan can be functionally sound, when a far more “austere” program, Social Security, is failing? They have done nothing but push the problem down the road hoping Gov. Quinn's increase in the state tax will solve the problem.

Regardless, barring pension bankruptcy or even state bankruptcy, you the taxpayer are on the hook for all this largesse for our public employees.

Gary Kolbe

Geneva