Traditional pensions: cui bono?
Younger teachers in Illinois, whose pensions were slashed last year by the legislature, should start asking whose benefits they're really paying for. The new Tier 2 pension only costs about 5 percent of salary...yet teachers are paying 9.4% of their salaries into the Teacher Retirement System. This takes the usual shell game of wealth transfers from younger and more mobile teachers to retirees to a whole new level: theft.
My hometown newspaper, the Southern Illinoisan, is running a story that explains who benefits the most richly from the old Tier 1 pension: union functionaries who stopped teaching decades before retirement but still receive a state-funded pension:
Then there is Kenneth Drum. TRS pays Drum more than $160,000 a year, despite Drum only working for 12 years as a teacher.
Drum's large pension comes not from his time in the classroom, but rather because of a 20-year career at IFT. Drum has collected more than $2 million from TRS since retiring in 1994, and is one of 21 former NEA, IEA, IFT or IASB employees who has collected more than $1 million from the TRS since retiring.
Comerford said he couldn't speak for individuals as to why they didn't take an IFT pension when they went to work for the union instead of continuing paying into a public system.
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About the Editor
Bernard Lee Schwartz Policy Fellow
Chris Tessone was a Bernard Lee Schwartz Policy Fellow and the Director of Finance of the Thomas B. Fordham Institute. He has strong interests in governance and education finance, especially teacher compensation and school facilities finance.
May 23, 2013