Breaking Down the Pension Puzzle

I’ll summarize pensions in three short phrases: needed (in some form) to help prepare for retirement, difficult to understand and maybe even more difficult to write about.

I give it a shot in the upcoming BizVoice (available online on Feb. 28 and in the mail that same day) with the help of some really smart state and national experts. A couple of takeaways:

  • Indiana’s public pension system is in better shape than most, thanks to some long-term innovative and common sense practices
  • Traditional defined benefit plans in the private sector have largely given way to defined contribution programs (think 401{k})
  • There remain big (really big) concerns over whether Hoosiers and Americans are saving enough

Check out the numbers and the analysis in the March-April issue of BizVoice.

Pension Abuse: Work a Day, Collect a Few Million

Pension systems of all types and sizes seem to be in some form of financial trouble. And yes, there are various stories of people taking advantage of loopholes to improperly, if not illegally, benefit.

But this is a bad one about teacher union lobbyists who became substitute teachers for a day in order to be in line (based on their lobbyist salaries) for big paydays down the road.

The Education Action Group reported the following:

The Illinois Teachers Retirement System, by the way, is millions of dollars in debt. That means it currently lacks the funds to meet its obligations to real teachers who will retire in the future and genuinely deserve their pensions.

One of the lobbyists, Steven Preckwinkle, will receive about $2.8 million by the time he turns 78 and $3.8 million by the time he turns 84, according to media reports. David Piccioli will collect $1.1 million by the time he’s 78 and $1.7 million by the time he’s 84.

The two lobbyists and the Illinois Federation of Teachers have paid approximately $230,000 into the pension system. Sounds like these two will make out pretty good.

But the story gets even worse. Now we hear about Reg Weaver, the former president of the NEA, who is drawing $242,657 per year from the Illinois state teachers pension system, based on his top salary working for the union. Most teachers pensions are based on their top salary earned in the classroom. Weaver topped out at $60,000 before he went to work for the union.

All of these situations were created by loopholes in a state law that allow union officials to tap into the teachers pension program. As Kent Redfield, a political science professor at the University of Illinois Springfield told Education News, "The people that are on the inside and understand the process are going to be able to make the system work to their advantage."

Sadly, it’s the taxpayers and average teachers on the "outside" who get the raw end of the deal.

Massachusetts to Legislators: If the Voters Grow Tired of You, You Should Make More Money

Things to like about Massachusetts: Well, Salem seems pretty cool. And you’ve got to respect the Celtics. I’ve always wanted to tour the Lizzie Borden House, so that’s a plus. Oh, and they have some very sound governmental policies … ok, maybe three out of four ain’t bad.

I’m going to tell you a story; we’ll call it "The Ballad of J. James Marzilli, Jr." Raise your hand when something sounds askew.

A state senator serves the public for over 20 years. He then resigns and announces he won’t seek re-election after he’s arrested and charged with disorderly conduct, resisting arrest, and accosting a person of the opposite sex. However, his name remains on the ballot and he loses handily — what with all the alleged accosting and whatnot. Yet, he files to double his pension. In doing so, he cites a state law that allows elected officials under 55 with more than 20 years of "creditable" service to upgrade their pensions if they fail to win re-election.

Barbara Anderson of Citizens for Limited Taxation offers the indignation:

"The whole point of being an elected official is to do such a good job that you don’t get thrown out," she said. "So if there’s an incentive that if you do get thrown out and then get rewarded for that, that just kind of scrambles the entire system, which doesn’t work under the best of circumstances, but this just makes it worse."

And for good measure:

"They get an additional pension if their constituents get sick of them and throw them out? Am I hearing that right? Only in Massachusetts…"

Looks like the pension decision is being withheld until a verdict is reached in his court case.

Egat. One has a feeling voters and the taxpaying public of the Commonwealth might like to let Ms. Borden take 40 whacks at this law.