Discussion of Unsustainable State Pensions

Prairie State Blue: The Problem with Pensions:

Defined benefit plans are not inherently unsustainable. They made sense and were solvent when salaries were lower, payout levels were lower, employees retired later and died earlier. With higher salaries and especially stepped-up pay schedules, earlier retirements, increased longevity, and payouts of up to 75% or higher on last year or so of salary, the system fails. In fact it has to fail.

What I like about the article is that the author has put out numbers we can play with. It’s not perfect — see the comments — but earns points for clarity and as a springboard for further discussion about reform.

2 thoughts on “Discussion of Unsustainable State Pensions”

  1. It is a good spreadsheet. It illustrates assumptions well. I’m guessing the xls file lets you make some assumptions yourself.

    But it’s time we quit playing with our assumptions and put the public pension system up for an action item in full public discourse.

    Assuming an 8% ROI is one thing. Bargaining an assumption like that into a defined benefit fully backed by the Illinois constitution is corruption of public trust.

    Fixing it so younger generations (new hires) can’t have it so good while the Woodstock generation joins hands and sings MC Hammer’s, “You Can’t Touch This,” is an epic example of SHAME.

    We can’t wait for elected officials beholden to special interest so close to their heart address this pending disaster. It’s going to take the rank and file coming together to clean their own houses of the corruption within. Only then will come solutions that could lower costs for those whose benefits are reduced.

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