The state of Illinois has long been in the throes of an undisputable pension disaster. On the brink of bankruptcy and an abysmal credit rating, the state of Illinois looked more like a a fiscal black-hole than an American state. Illinois made it illegal in 2015 to modify the pension plans of state employees, meaning that no matter what the cost of the pension plans to the taxpayer and state government there could be no amending to the agreed upon retirement policy. In the same year pension debt for the state reached a record $111 billion. For perspective, the Illinois pension debt grows by over $20 million every single day.
So what can be done to service a retirement system with such high costs? The answer for the people of Illinois is greater expenses. Higher state income taxes, greater costs of services- ever increasing costs that end up driving people out of the state, therefore costing the state even more in lost taxpayer dollars. At the center of the mounting cost is the ever-generous public service retirement system. According to the Illinois Policy Center 60 per cent of retirees retired in their 50’s; many of whom were able to receive full benefits. Half of the state’s pensioners will receive over $1 million in benefits over the course of their retirement, with one in ten receiving greater than$2 million. Over half of all retirees in the state can expect to collect benefits for greater than twenty five years, and thanks to a program built in to the pension system those retirees will see their benefits double in size over the course of their retirement.
The average career pensioner in the state of Illinois, with a career pensioner being someone with 30 years of service, can expect to make almost $70,000 per year in benefits through the course of their retirement. This equates to more than $2 million over that retirement in benefits paid. It is easy to see with numbers like these why the pension system in Illinois is hemorrhaging money, and why some sort of pension reform is needed. There must be responsible, data-driven investment to reign in the ballooning costs of these pension plans.