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Chicago Teachers Get ‘Cadillac’ Pensions

From the Heritage Foundation:

Chicago Teachers’ Retirement Benefits Are Extravagant

Jason Richwine | Wednesday Sept 13, 2012

When Chicago teachers began their strike on Monday, critics rightly pointed out that the city already pays one of the highest average teacher salaries in the nation. Even more important, however, is the generous retirement package received by Chicago public school teachers.

A Chicago teacher who retired in 2011 after 30 or more years of service time could expect an annual pension payment of $77,496.

Which is even higher than the current average salary of working teachers, which is around $76,000.

For context, the average Social Security benefit—which requires a much higher employee contribution into the system—would likely be in the range of $25,000 to $30,000 per year for a worker with a similar salary history.

For the record, Chicago teachers 9.4 percent of their salaries into their pension fund. While people making $110,100 or less pay 12.4% into the Social Security system (10.4% for 2012), plus another 2.9% (with no limit) for Medicare.

Another way to think about the Chicago teacher pension system is to examine the employer’s “normal cost,” meaning the cost of additional benefits that accrue each year to current teachers. In 2011, the risk-adjusted normal cost was 46 percent of wages.

In other words, for every dollar of salary paid to Chicago teachers, the city also incurred a cost of 46 cents for the future pension benefits they accrued in 2011. By contrast, the employer cost of a typical 401(k) plan in the private sector is about 4 percent of wages.

So their pensions and other benefits cost the city more than ten times the usual costs. What’s the problem?

Chicago teachers also enjoy a benefit that is rare in the private sector—retiree health coverage, which allows teachers who retire (often in their 50s) to maintain their health insurance until Medicare kicks in at 65. Accrued retiree health benefits for current teachers cost the city another 5 percent of salaries last year, meaning an additional five cents for every dollar paid in salary…

With retirement benefits that easily outstrip benefits provided to similar workers in the private sector, Chicago teachers going on strike to demand even higher compensation from taxpayers is just not defensible.

Meanwhile, this is going on with every public sector union, all across the fruited plain.

And yet Mr. Obama’s solution to our economic problems is to shovel more money to these unions.

This article was posted by Steve on Friday, September 14th, 2012. Comments are currently closed.

7 Responses to “Chicago Teachers Get ‘Cadillac’ Pensions”

  1. ilzito guacamolito says:

    ~ And yet Mr. Obama’s solution to our economic problems is to shovel more money to these unions. ~

    He promised shovel ready jobs, didn’t he?
    Cripes, I shoulda beena teachah.

  2. Right of the People says:

    Fire them all and hire non-union teachers. I’m sure there are plenty of them out there that would welcome a job, especially a lot of the utes who voted for the moron in the White House 4 years ago who are still hoping their future prospects change.

    And once you hire the newbies, give them a reasonable salary and benefits package in line with the private sector. Of course Rahm the Impaler won’t do that, he’d lose too many votes.

  3. DW says:

    I wonder if that guy holding up the sign is a teacher.
    And if so, if he made that sign he’s holding.
    And again, if so, if neiborhood is some local word I’m unaware of.
    Wow…

  4. Anonymoose says:

    Union life must be nice–retire in your 50’s making more than people in the private sector, mandated healthcare and raises, evaluations are done only on your union’s conditions, and getting to strike anytime you feel slighted. It’s bad enough that unions strongarm private companies, but when it’s public sector people paid by your taxes…..

    Completely gone is the connection between performance and compensation, or even need. Look in Detroit–a shrinking city with a reduced tax base, yet the unions want to keep full employment like 2 million people still live there. How did teachers, a supposedly white collar profession, ever get mixed up in a blue collar representation?

  5. AcornsRNutz says:

    I for one am just sitting back and enjoying the delicious irony of rahm emmanuel being put through what happened to Walker. It’s kind of cannibalistic. Or is it incestuous? I dunno, I got a public education, but it sure is dang funny.

  6. wirenut says:

    Well Excuuuuse Me! The only shoveling going on, is taxpayers dollars going to union coffers. Which vote democrat.
    What happened to “the children”? Sir Ronald, did it to the air traffic controlers, and we were better served. Fire them now.
    Acorn, it is funny\ironic, how to deal with what one has set in place. HAW-haw!


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