Further pension reform needed now

The current public pension funding plan, which aims to achieve a 90 percent funded level by 2045, comes at a very steep price with considerable risk. To illustrate I will use data for the Teachers’ Retirement System, which represents the greatest of Illinois’ pension obligations, as taken from a June 2011 report by the Commission on Government Forecasting and Accountability. Starting from 2010 the state is mandated to provide pension funding based on a level percentage of payroll. For 2011 the state’s obligation was about $2.2 billion, or roughly 2.5 times the employees’ obligation. This amount is projected to rise about 5.5 percent every year from now until 2045.

The funded level for the TRS pensions, currently only about 46 percent, is then projected to drop to about 36 percent and not rise back up to 46 percent until 2035. By 2040 the funded level is projected at 61 percent, and then a mad dash to 90 percent in the final five years is anticipated. In these later years we should finally see the benefits of the pension reform for new hires after Jan. 1, 2011.

So, how do you feel about providing the equivalent of a yearly 250 percent taxpayer-paid retirement match to employees under TRS for the next 33 years? How do existing pensioners feel about their pension funding level plunging to 36 percent and not recovering just to where it is now for another 20 years?

Without a doubt, the pension reform for new hires was a positive first step. But if we don’t also address reform for existing employees we are not only putting at risk the already earned benefits of past and present employees, but we are also causing hardships on the taxpayers of this state, both individuals and businesses.

Mark Evenson

Palatine