I've spent some time the past few days reviewing the Sun-Times package on the state's pension program, noting that the paper has used sensational headlines and ignored important context to dramatize the system's deficiencies. In their fourth and final piece of the series today, the reporters go back to the same well.
Twice, the Sun-Times refers to the pension packages that state employees receive as "lucrative." They deploy the adjective first to rebuke a (legitimate) point raised by American Federation of State, County, and Municipal Employees Council 31 spokesperson Anders Lindall, who tells the paper that "those individuals [making $100,000 per year or more] represent just 1 percent of all public pension earners." Here is the other example:
At the same time, pension plans for government workers continued to provide lucrative benefits -- from the ability to retire at 50 to yearly pension increases of 3 percent for most retirees 60 and older.
Unfortunately, the paper does not provide its readers with any data to back up these claims. Why don't they? Because the statistics just don't bear out their overblown thesis.
Check out this graph we compiled using the raw data the Sun-Times obtained from the state, which is online and behind a small pay wall. Combining both pensioners and spouses that are granted state retirement money, a mere 3,987 (1 percent) have pensions greater than $100,000 per year. What's more, only 65,985 (17.47 percent) have pensions worth between $50,000 and $100,000. That leaves a whopping 307,672 (81.47) percent who take in less than $50,000 per year:
We were also curious how many pensioners make less than $25,000 per year, as the Sun-Times lowest is delineation is $50,000. Unfortunately, their search function crashes consistently after a certain number of clicks, making it impossible to search through the data to find the dividing point. But, the sample size of survirors is small enough that we could crunch those numbers. Of the 55,272 spouses in the paper's database, 54,698 earn less than $25,000 per year (90.6 percent), while a mere 574 earn more than $50,000 per year (1.02 percent). The remainder, 4,597 survivors, fall somewhere in the middle, bringing home between $25,000 and $50,000 (8.3 percent) annually:
Not once in the entire series are these facts mentioned. Indeed, the paper (and its editorial board) uses their "findings" to argue for a series of pension reforms designed to fix what they call "a pension crisis." Their ideas?
-Create a two-tier pension system (We've outlined the concerns about this approach before. The Sun-Times also writes that "a two-tier system would save the state money eventually but wouldn't address the current pension debt.)
-End the current guaranteed 3 percent annual increases (We dealt with the horrible math underlying this proposal yesterday.)
-Raise minimum retirement ages (This is reasonable enough, although forcing people to work 10 or 15 extra years when the vast majority will only earn about $20,000 per year after retirement -- for a total savings of $11.5 billion in state contributions, according to the Civic Federation -- is a bit callous.)
-Tax pension earnings (If structured progressively, as Mark Brown suggested this weekend, this could be a useful tool for curbing the 4,000 gratuitous pensions over $100,000, money which could then be used to pay down the state's pension debts. But it would be ludicrous to tax public pensions for everybody else when the state does not tax virtually any other form of retirement income.)
-End double-dipping (This is a worthy reform.)
-End the current union-perk loophole (This is also a worthy reform.)
The state of Illinois does have a pension crisis. But that crisis was caused by lawmakers, who skipped payments and used the pension system as a credit card instead of raising sustainable revenue to pay for worthy expenditures. Reforming the state's tax structure is the most fair and responsible method for closing the state's pension deficit. Cutting the size and scope of employee benefit packages is just not.
Comments
Anonymous (not verified) on Tue, 09/15/2009 - 19:40
Huh? If you're argueing that the median pension is less than $100K, OK. It looks to me that the median is somewhere around $50K...add to that health benefits and it is a MONUMENTAL benefit not avail to the public at large, regardless of how many years of service one may have or how hard they work. Do you know how much you would need in your 401K to guarantee that kind of post-retirement income and healthcare?!?! The rest of us are putting away 10-20% of our salary in the hopes of something, but are guaranteed absolutely NOTHING except the requirement that we pay for the retirements of those with state benefits.
Really, not a very convincing arguement
Anonymous (not verified) on Wed, 09/16/2009 - 12:38
It also needs to be understood that many of these pensioners (ones that have been working in the system the longest and therefore get the higher pension amounts) DO NOT receive Social Security benefits.
Anonymous (not verified) on Thu, 09/17/2009 - 12:52
Why is it NEVER mentioned that 8% of my gross pay (and everyone else in this system) is put into SURS every pay period. These pensions aren't free by any means. Most of us are just ordinary worker bees. And as for free health care, one still must have coverage through Medicare. So free is not exactly accurate. Also our Social security is cut by a percentage of our pension. Not quite as generous as portrayed.
Anonymous (not verified) on Wed, 09/16/2009 - 08:06
What health benefits? My husband is a very sick retired public employee and has no health benefits.
Reformer (not verified) on Wed, 09/16/2009 - 08:09
Only 1% of pensioners receive more than $100,000 a year, while four out of five get less than $50,000.. Consequently, the median pension couldn't possibly be $50,000 as the first post states.
Anonymous (not verified) on Wed, 09/16/2009 - 10:42
One point that I think is always missing from the pension debate is that the State of Illinois does not withhold social security and until recently if you were employed before 1986 (?) medicare was not withheld. They can do this because of the defined benefits pension plan that we have. If they did not pay the SS and MC payments they would be fined and jailed but it is OK and legal not to fund our pensions? Also people retiring with a defined pension CANNOT receive SS even if you have paid into the system through other employment and are eligible for benefits. Since many people that are already retired cannot get medicare unless it is through a spouse or other employment they would be without health insurance if that benefit was removed because they do not qualify. I'm talking about people over 65 here. In essence the state has cherry-picked the benefits they will and will not pay through the defined pensions plan and apparently there has been little oversite or penalty for their actions.
Adam Doster on Wed, 09/16/2009 - 11:29
Anon 20:40
As we wrote in the post, the ST website keeps crashing on us, so we can't verify the median pension package. But the average pensioner earns $17,112 a year, according to the Post-Dispatch.
http://www.stltoday.com/stltoday/news/stories.nsf/editorialcommentary/st...
For folks specifically in the State Employees Retirement System of Illinois, it's just a bit higher ($20,436). And Reformer makes the salient point -- if 80 percent earn less than $50k and 20 percent earn more than $100k, there is no way the median is higher than the average.
Anonymous (not verified) on Wed, 09/16/2009 - 12:07
What is usually not discussed in these types of articles outlining the generous pension benefits that public employees in Illinois receive is that the high benefits are NOT that expensive for the state to provide. I am an inactive participant in the State University Retirement System (SURS). Throughout my years of employment in Illinois I contributed 8% of my salary to the pension system; SURS actuaries estimate that had the state contributed about 10-12% of employee salaries in a timely manner, it would have been sufficient to fully fund the generous benefits currently in place (which, by the way, are fully guaranteed by the Illinois Constitution and cannot be reduced for current system participants). So the question, then, is whether 10-12% of employee salary is too much for the state to have to pay? Is this out of line with what private industry pays? Any reasonable and fair analysis would conclude that it is not. Remember, state employees in Illinois do not participate in Social Security, and the state does not have to pay the 6.2% OASDI contribution for its employees. So any private employer that participates in Social Security, and on top of that pays 4-6% of an employee's salary into a 401K plan, contributes as much to employee pensions as does the State of Illinois. By the way, my current employer, a private university, contributes 10% of my salary to a 401K-type plan in addition to Social Security, and this is a fairly standard arrangement for private educational institutions nationwide. Obviously, the real problem is that the state did not properly fund pensions in the past, and is still not doing so currently. This benefited Illinois taxpayers in the past, but it will cost them in the future when taxes will have to be substantially increased so that the state can pay its contractual obligations.
Anonymous (not verified) on Thu, 09/17/2009 - 07:32
I am a retiree of the University of Illinois CU and I get $1580 a month for retirement. I worked for it, I was promised it, they took my money every paycheck and the State has not upheld its part of our retirement. We should not be penalized for their lack of responsibility.
Anonymous (not verified) on Thu, 09/17/2009 - 10:10
There are non-illinois state pension plans that are overfunded because the state matched the 8% they took out of employees checks as promised. For example, what if the State takes 8% out of my check every two weeks then puts 8% employer match in the pension fund, as pormised. Sort of like the social security match or the 401K match that most private employers pay. Would it be O.K. if your private employer promised a match for your 401K but has never actually paid it? Or would it be O.K. for your private employer to promise that they would pay their required social security tax after taking your social security tax out of your check, but, then never did? If it was up to Illinois, it would be perfectly O.K. and most likely sanctioned by our lawmakers. And, there would be a clause that your private employer could take that promised unpaid match and do whatever they wanted to with it instead of paying the match. And, the great thing about the Illinois scam, is not only do our politicians not have to pay for the pension as they promised to the citizens of the state, but they don't have to pay social security tax for state employees either - they got that agreement passed. And, evidently, the federal government dosen't care about that breach of promise, either. So, basicly, our legislators have a agreement that they don't have to pay our social security because they promise to pay an equal amount into our pension plan, then instead of paying into the pension plan as promised, they stole the money. Oh yea, they had to promise that we wouldn't be eligible for social security - a small price to pay - at least they won't have to pay it. Why aren't the citizens of Illinois upset about this. It certainly is not the workers or the pensioners fault. It is the citizens fault for enabling our politicians dishonerable behavior. And, doing nothing about it. The key here is the promise. Illinois' citizens should be upset that our lawmakers have not done what we asked them to do.. To pay our share as promised. We elected them to do a job and they have not done it. Repeatedly.
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