Mt. Vernon Register-News

Opinion

January 10, 2013

State needs to get out of pensions altogether

MT. VERNON — By Scott Reeder

When will the whining end and the reforming begin?

That’s what kept running through my mind this past week as I listened to politicians, union leaders and government employees talk about the state’s pension woes.

None of the plans Illinois lawmakers are considering will go anywhere near solving the state’s long-term pension crisis.

And yet even the most modest proposals have government workers angry.

For example, I read this in a central Illinois newspaper the other day:

“ My wife and I planned carefully for retirement and left a sensible cushion,” said retiree John Kilgore, who taught English literature at Eastern Illinois University from 1978 to 2010. His wife, Dollie, was a nurse at the student center, and both receive pension benefits through the state university retirement system. Kilgore said any pension reform adjustments to medical insurance or the pension’s COLA provisions ‘is more than our budget can stand.’”

A pensioner facing poverty?

Hardly.

Kilgore collects an annual pension of $91,692.

He retired two years ago at the age of 58.

He’s making more retired than most Illinoisans can ever expect to make working.

And those working Illinoisans are the ones being asked to pay for his pension.

In 2011, the Illinois Legislature jacked up income taxes by 67 percent — and nearly every dime of it went to cover pensions. That’s the equivalent of an extra week of pay being taken away from every working Illinoisan.

Taxpayers are finding it hard to save for their own retirements because they are busy paying for someone else’s.

It’s time for the state to get out of the pension business altogether. Eighty-five percent of us in the private sector have 401k-style retirement plans, after all.

Why not government workers, too?

I have a whole lot more confidence in individual workers making smart investment decisions for themselves than I do in politicians making decisions for them.

The transition from defined benefit to defined contribution plan has happened in industry after industry. Tragedy did not follow.

Pensions are based on the idea that workers can be guaranteed a certain benefit in retirement.

But that is a fundamentally flawed idea because no one has a crystal ball to predict life expectancy, future investment returns, possible inflation rates and a host of other factors.

And in the case of state government, the biggest variable is the politicians themselves — no one can predict what retirement benefits future politicians will promise government employee unions as they seek votes and campaign dollars.

A 401k-style plan is superior because it gets the state out of the business of predicting the future.

It also empowers workers to make investment decisions for themselves.

Pensions are a vestige of a paternalistic culture where the boss knows best — not only for your work hours but for your golden years.

As Illinois has clung to its outdated pension system, the state has sunk deeper and deeper into debt.

Illinois has the largest unfunded pension liability in the nation and Moody’s Investors Service gave Illinois the worst bond rating of any state in the country.

It’s time for the state to step away from pensions altogether.

1
Text Only
Opinion
  • I signed what? When Dr. Sam said, "You've got the prostate of a 16-year-old," it was hard to keep from beaming. This must be how a woman feels when a complete stranger tells her she has a beautiful baby. Well, maybe not quite. Still, it was hard not to feel proud o

    April 19, 2014

  • Obamacare's winning numbers Obamacare's critics have had a bad week. On Thursday, President Obama announced that 8 million people have enrolled in new health insurance plans through the Affordable Care Act's marketplaces, and a significant portion of them are young Americans. Y

    April 19, 2014

  • The rise of big data: A double-edged sword Debates are raging about whether big data still holds the promise that was expected or whether it was just a big bust. The failure of the much-hyped Google Flu Trends to accurately predict peak flu levels since August 2011 has heightened the concerns

    April 19, 2014

  • Only love can re-make your heart Was Jeb Bush right to insert love into a political debate? Such was the gist of a question I was asked on talk radio in response to the former Florida governor's assertion that some immigrants come into the United States illegally as an "act of love.

    April 18, 2014

  • Stop big tobacco from promoting e-cigarettes The tobacco industry is sharply raising spending on advertisements and other marketing for electronic cigarettes to try to make smoking glamorous again and hook a new generation of Americans on nicotine. We shouldn't let them get away with it. If adu

    April 18, 2014

  • A mental health checkup The country's inadequate mental health system gets the most attention after instances of mass violence of the sort that the nation has seen repeatedly over the past few months. Not all who commit these sorts of atrocities are mentally ill, but many h

    April 18, 2014

  • Your new password: sur**nder Have you changed your passwords since the security flaw known as Heartbleed emerged? Have you made sure they're all long, alphanumeric and randomized? Did you use a unique one for every site -- every bank account, every e- mail address, every music-s

    April 17, 2014

  • Hillary leans on Bill, Obama Recently Hillary Clinton gave what appeared at first to be a rambling and unfocused answer when asked to name the proudest achievement of her four years as Secretary of State. The short version is, she doesn't have one. But Clinton's words make a lot

    April 17, 2014

  • If GOP lost culture war, liberals did, too The "culture wars" have been a feature of American politics for almost a century, but recently a number of commentators have declared their end. Conservatives have lost, swept aside by a wave of enthusiasm for marriage equality and sexualized mass cu

    April 17, 2014

  • Cable guys too slow with Internet upgrade Remember the good-old 1990s, when you could make a pot of coffee while waiting for the screeching dial-up modem to connect to the Internet at a leisurely 9.6 kilobits per second? Two decades later, the average American household's connection is 1,000

    April 16, 2014

Twitter Updates
Facebook
Stocks