Boom and Soon Bust: Illinois Pension Looting Spree

Here’s a hot investment tip. Forget about the stock market and precious metals. Invest in a public pension by working for Illinois.

Via Illinois Policy:

Across all five state retirement systems, typical career workers pay for about 5% of the cost of their pension benefits. They receive an average of $1.7 million to $3.6 million.

You won’t beat that return on investment in the private sector. It’s practically a looting spree:

Depending on the system, between 43% and 94% of retirees are set to receive benefits of at least $1 million during retirement. Between 18% and 83% will receive lifetime benefits in excess of $2 million. The largest lifetime pensions can be worth more than $10 million.

Massive lifetime totals are accrued because Illinois government workers retire before they are old.

More than 50% of state workers and teachers will retire before age 60. Taking advantage of early retirement benefits, large portions of these employees will retire prior to age 55.

Meanwhile, as Democrat pols shriek that teachers need to be paid still more and media apparatchiks nod like bobbleheads,

The typical private sector worker would need to have saved $1.6 million in a personal retirement account by age 60 to receive the same $82,000 base pension as the average career teacher, or those with at least 30 years of experience. And 3% compounding post-retirement increases are not an option for private sector retirees.

However, there is a drawback, even for Illinois teachers:

They face a serious risk that the pension systems will go insolvent.

Already, the situation is out of control. Illinois public pensions are like algae in a pond that consume all the oxygen so that everything else dies:

[L]ocal mayors in several towns have been forced to lay off police officers and firefighters or otherwise cut municipal services to pay for pensions.

They can’t pay cops and firefighters to work because all the money is going to people who don’t work (at least not at the job they are being paid for).

The state spends about one-third less today, adjusted for inflation, than it did in the year 2000 on core services including child protection, state police and college money for poor students. During that time pension spending increased 501%.

Unless the Chicago Democrats who rule the state on behalf of unions accede to pension reform, the entire system will collapse.

If it sounds too good to be true, that’s because it is. Like Social Security, Illinois public pensions will pay off for some for a while but then go bankrupt.

On a tip from R F.

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