By: Mark Glennon*
The Center for Tax and Budget Accountability today released a report titled, Public Pensions: Frequently Asked Questions.
The “average” annual pension benefit for Illinois statewide pensions is just $45,832, says the report. Sounds pretty reasonable, which is why “averages” like that have been central to public unions’ messaging about pensions for years.
It’s bunk. While it might be true in a very literal sense, it’s so misleading and incomplete that it can only be described as dishonest. Here’s why:
“Average” pensions include those who work only part of their careers in the system providing the pension. So, a retiree who changed jobs at some point will have more than one pension or other retirement benefits. The only meaningful and honest way to look at averages is on a full-career basis. That is, what’s the average pension for somebody who works a full career in the pension system retiring today? You get far larger numbers.
To illustrate, let’s look at the two state pensions with the largest unfunded liabilities, which together account for 75% of our pension deficit, the Teachers Retirement System (TRS) and the State University Retirement System (SURS):
• The CTBA says the average TRS pension is $50,494 per year. However, the average pension for the most recent TRS retirees with 30-34 years of service (not even full career by most standards) is $67,224 per year. (TRS Annual Report, page 108.)
• The CTBA says the average SURS pension is $48,894 per year. However, the average pension for the most recent SURS retirees with 30 or more years of service is $79,692 per year. (SURS annual report, page 99.)
Then there’s a section in the CTBA report detailing why the pension crisis stems from borrowing against the pensions — basically, underfunding them and using money for other state purposes. What’s CTBA’s solution? Why, more of the same. They’ve long supported what they call “reamortizing” the pension debt. It’s hypocrisy. All that means is reducing annual contributions into the pensions and pushing the obligation further out for the next generations.
On the right is the CTBA’s own chart they used in legislative testimony to support their “reamortization,“ comparing annual Illinois pension funding under then-current law to the lower, strung-out contributions they proposed in red. They cut it off at 2045, though their extended contributions would last until 2060. They want lower contributions now, leaving the problem to kids and grand kids.
Along the same lines, the CTBA’s Executive Director, Ralph Martire, regularly peddles the myth, which actuaries ridicule, that 80% funding is healthy for a pension. An independent actuary who writes about pensions, Mary Pat Campbell, put him in her “Hall of Shame” for that reason — he effectively advocates for the very underfunding he derides.
This kind of nonsense has been coming out of the CTBA for years. Linked here is a video of Martire on WTTW’s Chicago Tonight in 2009 claiming that the average pension then was just $28,000! (Thank you to the angry reader who sent me that.) That hasn’t stopped WTTW and much of the rest of the media from constantly airing and citing him as if he’s credible.
The CTBA is union funded and its board is full of pensioners and union leaders, while claiming to be “bipartisan.” Linked here is a great piece on what they really are. Just like the public unions they represent in the pension debate, their tools are deceit and hypocrisy.
*Mark Glennon is founder of WirePoints. Opinions expressed are his own.
(Updated 1/22/16 to increase the SURS annual payment to the most recent date.)