This article has been updated as of October 25 to reflect the position of the Illinois Municipal Retirement Fund.
BLOOMINGTON (WEEK) — Taxpayers United of America stopped by Bloomington to discuss the pension problems the state is facing and how they feel the General Assembly should handle it.
“Now let’s be clear: this is not about the children or the roads. This is about pay and pensions,” Taxpayers United of America President Jim Tobin said.
Tobin feels the state is not doing enough, if anything, to reduce the pension deficit that is estimated to be at a quarter of a trillion dollars.
“The IMRF pension fund, which gives lavish, gold-plated benefits to retired municipal employees, is funded largely by property taxes. If this isn’t bad enough, IMRF pensioners, for the most part, also receive Social Security Pensions,” Tobin said.
Every year pensions go up by 3%, a fact Tobin said contributes to some retirees getting millions of dollars in pension money over their lifetimes while the same cannot be said for taxpayers.
“When you look at what the individual government retirees are actually collecting in tax-payer funded pensions, you get a better idea of why this theft of taxpayer wealth is so egregious. Keep in mind that the average taxpayer will collect only about $17,500 a year from Social Security,” he said.
According to Tobin, the highest-paid government retiree in McLean County is former Town of Normal City Manager Mark Peterson who receives nearly $150,000 annually. Peterson’s pension and the 399,000 in the state will increase each year.
“Over 24 years, it goes up by three percent every year compounded. They retire in their 50s and 60s so after 24 years the pension is doubled,” Tobin explained.
But Tobin did not just criticize the state’s handling of the issue, he also offered up some ideas to help bring comprehensive pension reform.
“All Illinois government new hires should be placed in a 401(k) style retirement savings account, beginning immediately, and the retirement age should be increased to 65. These measures would at least slow the bleeding until comprehensive pension reform can be enacted,” Tobin explained.
Statement from Illinois Municipal Retirement Fund Communications Officer John Krupa
“IMRF benefits are modest and sustainable. In 2018, the average IMRF member retired at the age of 62, with 19 years of public service, and will receive a monthly pension of $1,653. That fact is a far cry from the false narrative put forward by this anti-pension interest group. It’s also important to remember that IMRF pensions are funded by 3 sources: member contributions, taxpayer contributions, and investment returns. Every IMRF member pays either 4.5% or 7.5% out of every paycheck to fund a future IMRF benefit. Each unit of government (ultimately the taxpayers) pays a contribution as well, based on the assets and liabilities for their employees only. Those contributions are in turn invested, and historically, investment returns have funded 62 cents out of every $1 in IMRF pension payments. Tier 2 – a more modest benefit structure for every member who joins IMRF on or after Jan. 1, 2011 – costs 40% less than a Tier 1 benefit, and helps keep contribution rates for government manageable. With an overall funded status of 90%, IMRF is one of the best-funded, most sustainable, and leading public pensions in America. That is a fact that every IMRF member, participating employer, and Illinois taxpayer can be proud of.”