To the Editor:
The pension reform plan outlined in your Jan. 18 editorial, “Our view: Plan B for pension reform,” is erroneous and misleading in several respects.
Most glaringly, it is grossly misinformed to declare that none of the state’s current annual pension contribution “addresses the unfunded liability.” This year, less than 25 percent of the $3.4 billion state contribution to the Teachers’ Retirement System is for the cost of pensions. More than 75 percent of the state’s contribution is dedicated to the unfunded liability created by decades of underfunding by state government.
Since the lion’s share of TRS’ $104 billion total liability is owed to retired and older teachers, closing the existing plan still would leave a significant unfunded debt to be repaid. Further, prudent practice would require this debt to be paid down much more quickly than the 30-year time period noted in your editorial. This will increase costs related to the current system in the near term; before you even consider the cost of the contribution the state would make to the new defined contribution plan you propose. Also, you must take into account the documented, historic failure of defined contribution plans as a primary source of retirement income that adequately prepare people for their post-career needs.
Simplistic proposals and poorly researched conclusions do not make a useful contribution to the debate over serious policy issues that affect us all in Illinois.
Executive director, Teachers’ Retirement System