Orland Park trustee James Dodge
Some pensions offer retirees a far sweeter pot upon retirement than the workers paid into while they were working—especially if you’re a government worker in the state of Illinois.
According to the Illinois Policy Institute, some 650 recent retirees in the state’s pension system could end up drawing an average of $1.3 million in benefits over their lifetimes versus the $105,000 they contributed during their working years.
These figures are based on an expected lifespan of 85 years for workers who worked 30 years or longer for state government. A subset of the 651 new retirees—174 to be exact—contributed only $146,000 toward the pension fund over 30 years, but will average a lifetime pay out of $2 million.
Orland Park trustee James Dodge told the Prairie State Wire he is urging the state to mimic the strategy they’re starting to implement in his village. There, he said, budget talks include pension planning.
“As a trustee, I’ve pushed for years to factor into our budgets and negotiations the true costs of benefits—including the pension contribution,” he said via email. “We are now doing this because it’s the only way to truly manage the growth of costs in government and the public needs to see the real numbers.”
He said the transparency is essential because village employees participating in the Illinois Municipal Retirement Fund are only kicking in 4 percent of their salaries, whereas the government unit they work for contributes 10 percent of the worker’s salary.
“How many people in the private sector get more than a 2-to-1 match on their 401k savings?” Dodge asked. “How many taxpayers get professional money managers to manage their money for their retirement? How many get a guaranteed 3 percent increase every year?”
He cited the state of Arizona’s handling of pensions as a model but acknowledged it’s “not perfect but better than Illinois.”
In Arizona, lawmakers overhauled pensions for police and fire departments, as well as those for corrections and probation officers. Essentially, Arizona amended its constitution “to limit future benefits for public employees,” as Rich Miller explained in an op-ed in the Chicago Sun-Times.
Although Miller doubted a similar plan would work in Illinois, Dodge said it may be the only way out.
“None of us can afford government that doesn’t honestly account for the lifetime benefits of working for government” because “it’s simply not fair to the taxpayers,” he stated. “So we either take a strong dose of financial honestly medicine when it comes to the true costs of government pensions and manage that growth or we move to a 401k type solution.”