Mt. Vernon Register-News

Opinion

February 15, 2013

Private and public pensions - no comparison

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I have a very good friend that I worked with for 30 years. He is bright, articulate and most of all totally honest. This guy had a very important job at General Tire at the director level.

We lost touch like a lot of retirees do when locating to different parts of the country. I recently received an email from him and in a couple of paragraphs he succinctly put the problem I have been writing about for a couple of years into language and perspective that anyone can understand.

His situation, although no fault of his own, is the epitome of what is at the heart of our countries financial problems and is pushing Illinois toward bankruptcy.

I hope you read this very carefully and think about the difference that has caused a huge chasm between public and private retirement ages and pensions. Did you ever ponder or even think about the difference between just paying? I am talking about taxpayers paying for 15 years of retirement for someone retiring at 65 years old, someone who worked for a private company that receives a pension from defined contributions and paid — along with their company — into the Social Security system.

The 65-year-old will get increases based on the CPI on Social Security. This applies to less than half of his retirement in a lot of instances. Compare this with 25 years of retirement for the public employee retiring at 55 years with a guaranteed 3 percent increase each year in retirement. The difference will amaze you. My friend and colleague has done a good job explaining this problem with his personal example. He does not mention the windfall from unused sick days at retirement because the only thing received in his case would have been vacation not taken and certainly no juicing — increasing of salary by 10 to 20 percent in the last year for the purpose of increasing retirement pay.

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