Pensions
Public pension plans in Illinois and most other
states operate as a defined benefit program for participants. Defined
benefit pension plans guarantee a pension amount at retirement based
upon final average salary and the number of years of service at the time
of retirement. Lately there has been an increasing push in the public
arena by those advocating for Illinois public pensions to switch to a
defined contribution system. Defined contribution plans are 401(k) type
plans most commonly seen in
the private sector.
Articles and news reports often focus their attention on the issue of
changing public pension systems from a defined benefit plan to a defined
contribution plan. Proponents of this switch frequently fail to mention
that individuals in the private sector who participate in defined
contribution plans also participate in Social Security. In Illinois,
public school teachers and university employees do not participate in
Social Security, making any proposed change to a defined contribution
plan risky and unwise. In fact, switching from a public pension like TRS
to Social Security and a defined contribution plan would actually cost
the state more than the current defined benefit plan does.
Here
is a quick comparison of the two retirement benefit plans
Defined
benefit
• Guaranteed benefits
• Lifetime benefits
• Survivor and disability benefits are part of the plan
• Encourages stable workforce
• Investment fees paid by retirement system
Defined
contribution
• Benefits based on investment
earnings
• Benefits terminate when account is exhausted
• Survivor and disability benefits not part of the plan
• Allows for portable assets
• Investment fees paid by member
Traditionally, retirement planning has focused on the three-legged stool
of defined benefit plans, Social Security and defined contribution
plans. The public pension systems of Illinois provide retirees with a
stable and secure retirement.
The IFT strongly opposes any attempt to “cut the legs off the stool,”
that is, to switch to a defined contribution retirement plan. The union
promises to fight any efforts to undermine the benefit structure of the
current defined benefit system under which all the pension systems
listed previously operate.
Your retirement security is an essential part of the benefits to which
you are entitled after a career in public service. As an IFT member, you
can be confident that your union will fight with you to protect your
pension.
Illinois Municipal Retirement Fund (IMRF)
Municipal Employees' Annuity and Benefit Fund/Chicago (MEABF)