Illinois has the worst pension crisis in the nation. If real reforms aren’t enacted, retirees will see their pensions slashed, taxpayers will be forced into a massive bailout and younger state workers might not receive a pension at all.
The recent pension reform bill that passed is actually a step backward for the state. Only real reform that moves Illinois away from defined benefits and toward worker-controlled retirements can save the state from insolvency.
Here are the top 10 facts you need to know about Illinois’ pension crisis:
1. The pension crisis is a massive burden on Illinoisans. Taxpayers are on the hook for more than $203 billion in total official state and local pension shortfalls. That’s $42,000 per household.
2. The pension crisis is larger than official estimates. Using Moody’s Investors Service’s more conservative methodology, Illinois’ state pensions alone have a $200 billion shortfall.
3. In addition to state-level shortfalls, Chicagoans are also burdened with massive local debt. Chicago taxpayers face $63 billion in total city debt and pension liabilities: $61,000 for every household in the city. That’s triggered a triple-notch downgrade for Chicago.
4. The structure of Illinois’ pension system, not deliberate underfunding, caused the pension crisis. A majority of Illinois’ unfunded liabilities are due to the failures of defined benefit plans.
5. More than 63 percent of current state pensioners retired before the age of 60, nearly a decade before private sector workers generally retire.
6. The average state retiree contributed only 6 percent of what they will receive in pension payouts. Average career teachers will contribute only about $100,000 to their pensions, yet will receive $1.5-$2.5 million over the course of their retirement, depending on the age at which they retire.
7. The pension system is near insolvency yet is providing cost-of-living adjustments to millionaire retirees such as Dr. Leslie Heffez, a State Universities Retirement System, or SURS retiree with an annual pension of more than $500,000.
8. The recent pension reform bill that was passed will actually do more harm than good. Click here for five reasons why the recent pension reform bill doesn’t solve the crisis and deflates any pressure for further reforms.
9. A solution for Illinois’ pension crisis already exists: 18,000 SURS members already use SURS-provided 401(k) self-management plans.
10. Pension reform bill House Bill 3303 protects already-earned benefits while granting state workers control over their own retirements.