State’s paying plenty into pensions

With all the rhetoric regarding the state of Illinois not paying its fair amount toward its public pension obligations, I decided I would have a look at the numbers myself. And what better place is there to look than the Teachers’ Retirement System website. All the following information was taken from this site.

While I acknowledge the actuarial funding level of TRS declined from 59.5 percent in 2001 to only 48.4 percent in 2010, the question is why. Simply put, it’s a matter of revenues not keeping up with expenses. So, let’s take a closer look.

From 2001 to 2010, employees dutifully contributed their share (currently 9.5 percent of wages) for a total of $7.8 billion. However, over that same period the taxpayers contributed nearly $16 billion: $14.5 billion from the state (including a $4.3 billion lump sum from a 2003 bond issue) and $1.2 billion from local school districts.

If the average taxpayer contribution during the past decade is more than twice that of the employee, then where is the problem? The chief answer: It’s the benefits paid out! In 2001 the annual benefits were only about $1.5 billion but they increased steadily each year to about $4 billion in 2010.

So if a 9.5 percent contribution of their wages is fair for the employee, what is the fair percentage for the taxpayer? Obviously, taxpayers paying 19 percent (twice that of the employee) is simply not enough. For those employees in a 401(k), how much does your company contribute? Is it also 19 percent, or is it more like 1.5 percent to 3 percent with an annual dollar cap?

So, the next time you hear someone complain that the state is not paying its fair share for public pensions, direct them to the TRS website for the hard facts.

Mark Evenson

Palatine