Last week I told you that I have elected to opt out of the General Assembly Retirement System (GARS), and thus will not be eligible for the legislative pension. There are a number of reasons why, and I’d like to let you know what they are.
- I don’t believe that anyone in elective office, from dog catcher to President of the United States, should be eligible for a public pension. If we want to get serious about making sure that elective public service doesn’t become a career, we can start by making it less comfortable for politicians to stay in office.
- As a legislator, I’m going to have to make some tough choices regarding the state’s pension system. By not taking a pension for myself, I’ll be able to make choices that aren’t colored by my own interests. I can look state workers in the eye and tell them that I’m not asking them to make any greater sacrifice than I am.
- At 16% funding, GARS is the worst-funded of the state’s five retirement systems. The fact that almost half of the General Assembly has opted out means that fewer and fewer members will be contributing to and subsidizing the pensions of those we replace. As of February of 2015, 37 state legislators (29 House, 8 Senate) had opted out of GARS. As I write this, 12 members of the incoming Republican class have already opted out, and I’m confident that more will follow. What this means is that while all of the pension systems are in dire straits, GARS is on the fast-track to insolvency.
There is one other thing I just found out. GARS is the only system among the 5 state public pension systems that allows members to opt-out. (The State University Retirement System (SURS) has a limited op-out provision, allowing them to put their money into a defined contribution style plan.) Those who opt out of GARS must then choose to either participate in Social Security or the state employees’ deferred compensation plan. Under the deferred comp plan, I can, as someone over 55, contribute up to $24,000 per year into the plan. I won’t pay taxes on the money until I take it out.
The bottom line is that instead of contributing 11½% of my legislative salary into a pension plan that’s on the road to insolvency, or 7.65% to Social Security (matched with money the state doesn’t have), I can put over a third of my pay into my own account which I control. Even though there’s no state matching contribution, that’s a no-brainer.
The question I have: if this is such a great deal for the General Assembly, why isn’t it offered to the rest of the state workforce as well? Obviously, if employees were allowed to opt-out, fewer participants would mean lower contributions needed to prop up the system. Therefore, new employees are chained like galley slaves to a sinking ship they can’t escape.
Without true pension reform, and a plan to get the underfunding off the budget, Illinois will soon run out of options.