Report: Benefits Not to Blame for Illinois Pension Underfunding

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A new analysis from the Chicago Sun-Times and the Better Government Association reveals that some retired Illinois public workers earn hefty pensions – but most don’t.

And when it comes to pinning blame on the state’s (and Chicago’s) pension underfunding, the blame should be placed on governments for falling short on annual contributions.

From the Sun-Times:

Though some public employees have taken advantage of numerous pension “sweeteners” over the years to boost their benefits, the root of the problem is that government officials kept promising lifetime benefits to workers — and, in many cases, to their surviving spouses should they die — while failing to apportion the taxpayer dollars necessary to keep those pension funds solvent long-term.

Nearly 55 percent — about 167,000 people — get pensions of less than $40,000 a year, though many of them are spouses of deceased retirees getting survivors’ benefits, and others’ pensions are small because they worked in government for only a few years.

State government, City Hall and CPS might have been able to avoid their pension problems had government officials steadily deposited taxpayer money into the pension funds over the past several decades.

But not only did politicians keep skipping or shorting the pension funds on those payments — driving them closer to potential insolvency — they also kept borrowing to balance their budgets.

The Chicago Board of Education didn’t contribute any money at all to the pension fund for administrators, teachers and other CPS employees for a full 10 years between 1995 and 2005.

In state government, the situation grew so dire that the federal Securities and Exchange Commission in 2013 charged Illinois with securities fraud, accusing the state in the mid-1990s of enacting a pension-funding plan that “structurally underfunded the state’s pension obligations and backloaded the majority of pension contributions far into the future.”

It’s worth reading the full analysis, which can be found here.

 

Photo credit: “Gfp-illinois-springfield-capitol-and-sky” by Yinan Chen – www.goodfreephotos.com (gallery, image). Via Wikimedia Commons – http://commons.wikimedia.org/wiki/File:Gfp-illinois-springfield-capitol-and-sky.jpg#mediaviewer/File:Gfp-illinois-springfield-capitol-and-sky.jpg

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  1. […] Report: Benefits Not to Blame for Illinois Pension Underfunding […]

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