Reining in pension costs
On September 29, Policy Analyst, Matthew Glans, had a letter to the editor published in Crain's Chicago Business (circ. 45,667). Matthew wrote: "The decision by the Illinois Teachers Retirement System to lower its expected rate of return for its pension fund investments is a positive step, but it doesn't go far enough to address many of the real problems built into the pension system ("State teachers pension board lowers expected rate of return," ChicagoBusiness.com, Sept. 21). The TRS' modest decrease in its expected rate of return is simply not enough. If the estimated rates of return for these pension funds continue to fall short of expectations, then pension systems across the country may be in even more trouble than is currently thought.
All of Illinois' major state public pension systems face liabilities that are among the highest in the nation and quickly racing out of control. Significant reforms are needed to bring public pensions back into the black. In the short term, per-year pension payouts should be capped at a sensible level, the retirement age should be raised, double dipping should be eliminated and workers should be required to make higher contributions. Long term, governments must follow the private sector's lead and switch workers from a defined-benefit pension system to some type of defined-contribution system."