not based on fact
In the July 27 Daily Herald, R. Eden Martin presented an inaccurate picture of Illinois' public pension systems while suggesting that the current plans be scrapped.
Mr. Martin blames "Illinois' fiscal crisis" on the "staggering growth" in pensions. This blame is misplaced and unfair. Retired public employees are real people -- not just entries in a ledger. Pensions paid annually to retired teachers alone create $4 billion in economic activity in Illinois and sustain 30,400 full-time jobs.
Mr. Martin's warning that underfunded public pension systems may run out of money "in a decade or so" relies on an incorrect supposition. He assumes that at a future point state pension systems will just cease and all outstanding financial obligations will be due. But unlike private corporations, state government cannot merely "go out of business" and divide up the remaining assets to satisfy creditors.
He incorrectly states that if a public pension fund goes broke its members get stiffed because it is not written in law that the state guarantees its pensions. The Illinois Constitution, however, protects public pensions as an "enforceable contractual relationship." And, for Illinois teachers, state law does make "all" pensions "obligations of the State."
Mr. Martin says employees would be "better off" if the state could "freeze the current plans" and rely, presumably, on a 401(k)-style system. Mandating a 401(k) for public employees would not save money. "Freezing" the existing plans still means paying out millions in pensions until all beneficiaries die. Adding a new retirement system on top of that would cost millions more.
Finally, it is questionable whether public employees would be better off in a 401(k)-style plan than in the current state pension system. Ask anyone in a 401(k) how much the last recession affected their plans to retire.
Public Information Officer
System of the state of Illinois
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Publication information: Article title: Pension Criticisms. Contributors: Not available. Newspaper title: Daily Herald (Arlington Heights, IL). Publication date: August 2, 2010. Page number: 10. © 2009 Paddock Publications. COPYRIGHT 2010 Gale Group.
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