Government Pension Facts of Life

In the different states and cities of the U.S. the government unions have been able to get pensions and fringe benefits during good economic times at the expense of taxpayers, which the latter were not fully aware of.

When times got bad, the taxpayers soon learned government workers were being paid as much as twice they themselves were getting from pensions and benefits. Worse, the payments were unsustainable, despite ever-higher taxpayer loads.

One example why the burden is onerous: In Illinois, teachers who contribute nothing to their pensions can retire at age 60, at 65% of pay. And their retirement check is increased 3% a year for inflation.  Not bad when secure investments these days earn less than 3% to 4% a year, while such pensions assume earnings of 8% or so.

Think: $1 million at 4% yields only $40,000 income a year. How many millions have to be contributed by taxpayers to meet the capital and income shortages to meet annual pensions for the life of each teacher? (See the Earl J. Weinreb NewsHole® comments.)