The largest pension plan in Illinois is paying out millions to retired government employees in an unfair system to taxpayers that must be revamped, according to the Illinois Policy Institute (IPI), a Chicago-based nonprofit watchdog.
“There is more money going into the fund, but the shortfall continues to get worse,”
Ted Dabrowski, vice president of policy for IPI, told Higher Education Tribune.
Specifically, the State Universities Retirement System (SURS), which pays the pensions of 52,000 public university retirees, may run out of money in less than 10 years. It currently reports a funding shortfall of more than $21 billion.
Additionally, the fund has less than half the money it needs right now to meet its future pension obligations.
Part of the reason is that half of all SURS retirees get to retire and draw pensions earlier in life.
“Why do we allow workers to retire in their 50s when people are living longer and longer?” he said.
Another reason is that more than 7,400 SURS retirees will receive upwards of $2 million during their retirements based on actuarial life expectancies, according to IPI. And while the top earners pull down multi-million dollar pensions via Illinois taxpayers, even the average SURS career worker -- one who has 30 years or more of service and who has recently retired -- will receive a starting pension of $71,600 and earn over $2 million in retirement benefits, according to IPI.
IPI has a solution, Dabrowski told Higher Education Tribune.
“We need to move all employees into 401(k)-style accounts or other self-manage plans like everyone has in the private sector so that way we have a fairer system,” he said. This would ensure that the fund would not go bankrupt, while at the same time enable universities to pay less in retirement monies, Dabrowski said.
“This would be a fairer plan for retirees, who would be able to count on the funds being in their accounts, for taxpayers, and for students, who would like to see more money go to the classroom than to the pension fund,” he said.
SURS reform, Dabrowski said, is critical to help fix the state’s overall government-worker pension plans, which have become unaffordable and unfair to the taxpayers of Illinois.
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