Pols to blame for today's pension woes
In response to Bill Zettler's Jan. 18 letter, here are some additional facts: The state's normal cost for pensions today is about 8 percent of payroll across the three large systems (teachers, state employees, university employees). That amount was already forecast to decrease to just 6 percent of payroll due to changes passed five years ago.
The state additionally pays about 3 percent of payroll into Social Security; that represents its full FICA contribution for the 1 in 5 pension-fund participants eligible. In all, the state's normal cost for retirement benefits is today about 11 percent of payroll. Around the same for the average private sector company.
The state saved billions by skipping the employer's contributions for decades. The legislature's bipartisan Commission on Government Forecasting and Accountability found that from FY 1996 through FY 2008, the state's pension debt grew by $35.6 billion. Of this, $30.3 billion (85 percent) is the result of factors not attributable to employees (53 percent the state's failure to pay its share, 24 percent early retirement incentives, 8 percent poor stock performance).
The 238 percent you quote is the result of the state trying to play catch-up for decades of nonpayment. If you really look at the numbers, and the state had put its fair share into the pension system, taking advantage of decades of compound interest, the pension system would be a nonissue.
All of us (the taxpayers) benefited from decades of state spending and low taxes because Illinois chose not to pay its bill. Now we are playing catch-up and have no one to blame except our politicians' over spending and careless borrowing.