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
  • Why Obama shouldn't go to Ferguson On Monday, ABC’s Ann Compton asked President Barack Obama whether he would visit Ferguson, Missouri, amid the continued unrest. Obama didn’t give a firm answer, but he did suggest it’s probably not a good idea.“When they’re conducting an investigatio

    August 20, 2014

  • Food stamps' $80B secret spending program Imagine a government program that has exploded in size, is the subject of bitter partisan haggling and spends almost $80 billion a year in secret.No, not the National Security Agency, the Central Intelligence Agency or the Department of Homeland Secu

    August 20, 2014

  • Vouchers provide greater choice I was chatting the other day with a fellow who, along with his wife, homeschool his children. We joked about the stereotype: Moms in denim skirts.But then he expounded on the benefits his youngsters have derived from being taught at home: a customize

    August 20, 2014

  • A rare experience Alexandra Petri’s editorial, “What exactly are we seeing in Ferguson” is well written and did something which has increasingly become a rare experience for me. Her article caused me to think!Petri makes the case for media coverage of American events,

    August 19, 2014

  • Naive? Simple? I will admit outright that I may be a little naïve and tend to look at things through a simple prism. I received a suggestion for a column with an accompanying article written by By Reed Abelson and Eric Lichtblau concerning the failure of our govern

    August 19, 2014

  • Don't pass 'coup clause' with a security waiver It is a sad reality that national security waivers often render human rights laws moot, inviting the government to overuse the loophole to accommodate immediate needs. The “coup clause,” which mandates foreign aid suspension to countries after a mili

    August 19, 2014

  • Clinton could end up like Gore Although we’re all still sort of pretending that it remains to be seen whether Hillary Clinton will run for president in 2016, she recently gave the most definitive confirmation she has to date of her impending candidacy. No, she didn’t say the words

    August 16, 2014

  • Guru will work for food ‘At the height of its power, the photography company Kodak employed more than 140,000 people and was worth $28 billion dollars. They even invented the first digital camera. But today Kodak is bankrupt, and the new face of digital photography has beco

    August 16, 2014

  • Ferguson police fumbled protests From the chief of the police department to the president of the United States, government officials on Thursday promised a different approach to the racially-charged unrest in the St. Louis suburb of Ferguson. But the situation demands a lot more tha

    August 16, 2014

  • A better tax code solution: taxing consumption According to much conventional wisdom, the flap over corporate “tax inversions” is just the latest evidence that the tax code needs a comprehensive overhaul like the one agreed to by congressional leaders and President Reagan in 1986.Whether you cons

    August 15, 2014

Twitter Updates
Facebook
Stocks