Pensions in the public sector are far different from the private sector. While most private sector pensions are "defined contribution," the public sector uses "defined benefit." Ask your wife the difference. She'll know.
As an example, a teacher's retirement in Illinois is figured at 75% of the average of their last four year's salaries, after 33 years' service, at least age 55. The Chicago Tribune just did a Watchdog piece on teacher salaries/retirement benefits. Here's one glaring pension example:
The Chicago Tribune just did a Watchdog story on Illinois teachers. Here's their most glaring example:
A now-retired physical education teacher and longtime football coach at Addison Trail High School in DuPage County earned more than $184,000 in 2008-09 — the highest teacher salary in the Tribune's analysis. He had 35 years of teaching experience and a master's degree, all factors that boosted his salary.
Illinois teacher salaries: Some educators in suburban Chicago earning more than $100,000 - chicagotribune.com
Here he is identified:
Name Deleted -- You'll find it here:
Illinois Pension Database :: Latest News :: PIONEER PRESS ::
School District--DuPage HSD 88
Salary at Retirement--$186,464.86
Retirement Date--7/1/2003
Age at Retirement--56
Early Retirement Incentive? No
Annual Pension--$138,871.68
What job in the private sector pays a pension like this?
Members can retire at age 60 with 10 years of service and receive benefits that the member has earned. For example, ten years of service multiplied by 2.2% equals 22% of the final average salary. Senate Bill 1946 Teachers contribute 2% more of their salaries into their retirement program than Social Security recipients.
Teacher pension funds are under water throughout the country -- seriously underwater -- because of the onerously generous benefits guaranteed to them under state law. Our politicians sold us out.
To meet the ridiculous promises made to these public sector employees made by politicians, state pension funds are investing in ever-more risky investment vehicles. A risky investment strategy is defined as investment in other than fixed income or cash. The top 25 riskiest
public pension funds hold over 75% of their assets in these vehicles.
Risky Business: Pension Funds With Less Than Conservative Asset Allocations : NPR Don't take my word for it. Google around for your own state. You'll see it.
Just plain old municipal pensions?
Municipal pensions in Illinois: http://media1.pioneerlocal.com/multimedia/pppensions061010g3.pdf_20100608_14_48_12_75.imageContent
Retirement age -- 50 with 20 years of service
Retirement formula -- 2.5% of final salary for each year of service
Maximum annuity -- 75% of final average salary -- after 30 years of service
Salary used to calculate pension -- Salary on last day of service
Annual cost of living increase -- 3% compounded
Employee contributions -- Police -- 9.91% of salary; Fire -- 9.45% of salary
Source: Illinois Commission on Government Forecasting and Accountability
These pensions have the average working man drooling in envy. All at taxpayer expense. And each and every one of them are unsustainable. Add the deflation risk to the mix, and, well, hold onto your hat.
Ask your wife.