Out Here: Are teachers pensions a good deal?
After my recent column on pensions, a retired teacher wrote me an email:
"Are you aware that teachers do not receive any Social Security? Our pensions are not a perk as in the private sector. We did not pay into Social Security. We paid into our pension fund. This is our Social Security. Without our pensions (which we paid for), we would have no retirement income."
She's right; teachers don't pay into Social Security.
What really caught my eye in her email was four words – "which we paid for."
I wondered how much this teacher paid into the system and how much she has received so far.
I called the Chicago-based Illinois Policy Institute, a conservative think tank that studies pension issues.
As it turns out, the group has information on retired teachers in Illinois, which it says it received from the Teachers Retirement System.
Here's what the think tank had for the teacher who wrote me:
The woman, now 72, retired in June 2002 after 34 years of service. She now receives an annual pension of $66,519.
To date, she has received $649,504 in pension payments. She contributed $90,706.
If she lives to a normal life expectancy, with a 3 percent cost-of-living increase each year, she will collect a total of $1.8 million from the Teachers Retirement System, according to the Illinois Policy Institute. That would mean her contribution would make up about 5 percent of what she collects. (Her benefits may decline, though, if a lawsuit against recent pension reform fails.)
Her employer also contributed a portion on her behalf to the retirement fund. And, yes, the fund's investments bring an investment return. But did those factors increase this teacher's investments 20-fold? Or did the taxpayers make up much of the difference?
I asked Dave Urbanek, the spokesman for the Teachers Retirement System, about the institute's numbers.
He wondered where the group got its data, saying it had put out bad information before. He doubted whether the numbers were correct.
He also questioned the $1.8 million figure.
"They don't know how long someone will live," he said.
True, but the institute stated that the figure is based on normal life expectancy.
I told Urbanek that if he could prove that the institute is putting out bad information, we would report that.
Again, the retired teacher is correct. Educators don't pay into Social Security. But it appears as if she got a much better bang for her buck with the Teachers Retirement System than she would have with Social Security.
David Giuliani is a news editor for Sauk Valley Media. You can reach him at firstname.lastname@example.org or 800-798-4085, ext. 525. Follow him on twitter: @DGiuliani_SVM.