That includes me, of course, and now is as good a time as ever to again thank Illinois taxpayers for mine.
Unlike all years since 1991, except 1996, 2000 and 2007, this year the Consumer Price Index exceeds 3% by a lot.
So pensioners will lose purchasing power, just like everyone else, as a result of the Biden Administration’s pumping dollars into the economy.
In all other years since the Tax Cap took effect in 1991, those on public pensions saw their pension increase beat the rate of inflation.
Where but in a Democrat run and controlled entity could retirees double their pensions in about 24 years?
“Government Worker Retirees”.
At ordinary taxpayer expense.
Taxpayers for the most part who work, worked in the private sector.
Private sector retirees are even lucky to be getting a pension much less a cola on a pension they may have.
Some how, some way the ridiculous cola for retired government workers needs to be abolished.
bred, it’s not the cola it’s the double dippers and university deans that retire with a 600k starting pension that gets the cola.
To start at 600k you are making 800k per year.
One can easily impute they have one hell of a portfolio in the bank.
Regardless of ending salary the pensions of those making over 100k should start at 100k for all and get a cola from there.
That would likely wipe out 10s of billions in debt.
Unfortunately, like the 2A “shall not be infringed” line Mini Mike Madigan put in the IL constitution “shall not be diminished”.
You aren’t going to find a dem loving union person that will vote against their best interest.
Well that and the cheating in elections helps keep them in power too.
This is compounded to boot.
Most states only increase pensions based upon the original annuity.
20 years ago when they retired.
Today a minuscule increase.
BTW IMRF does not compound.
Compounded state pensions should be eliminated.
Illinois is a rarity.
People living off their 401k, IRA etc have received a double whammy.
They probably follow a withdrawal rate of 3 or 4%.
The 60/40 Retirement funds are down on average 25%.
Inflation is up 9%.
They lost account value and fight Biden’s inflationary economic policies.
The rule of 72 determines how long in years it takes for an account to double when compounded at a certain interest rate.
For instance a $1000 dormant bank account left unattended would become $2000…. $10,000 would be $20,000 and so on so forth.
Retirements follow the same mathematical progression.
72/3 =24. So the teacher that retired 24 years ago at a 60 yearly pension now gets $120,000…….due to the 3% yearly compounded increases.
Ned, I like math. What was the starting point of the pension that gets them to arrive at 120k? You’re obviously an actuary. I produced a spreadsheet based on age, years of service and retirement age that pretty precisely calculates the pension outcome. It’s plug and play. I would like to run your hypothesis through it but I need a few more variables to do that.
Simply stated most Illinois system retirements provide 75% pension based upon the average of the last four years and 30 years service and age 55.
Some systems are last year some are last three.
That is why teachers get the ridiculously unfair end of career bump once they announce retirement.
80k at 75% puts the first year annuity at $60k. Each year they get 3% compounded.
I based that estimating salaries 24 years ago.
Today most CL area teachers are well in excess of $100k.
Some are $140 depending on tenure and position.
No pension should compound at 3%. No wonder Illinois is the poster child for pension abuse.
Got it Ned. I agree with all of your math.
Educators in Tier 1 need to do 34 yrs to get that 75%.
I don’t think the CL contract states 30 but I wouldn’t live in that liberal hellhole so I’m not familiar with the years of service being 30
This mess is a result of kicking the can down the road by Governors Thompson, particularly Edgar (Google “Edgar Ramp”), Ryan, Trump’s buddy Blago, Quinn, Ruiner,and Pritzker.
It is not sustainable.
It needs to mirror pensions in the private sector, i.e. non-existant.
Make them contribute to 401ks, 403bs, etc.
At least for new employees going forward. Make them wait to age 65 to collect.
This is a time bomb waiting to go off.