A hundred years ago, Illinois teachers received a fixed, annual benefit that was determined independent of salary: a “flat pension.” However, there were severe issues with the original pension system.
While there are only a few winners and a much larger pool of losers under current pension systems, a smooth accrual model would allow more teachers to gain secure, retirement benefits from the onset of their careers.
Illinois experienced increased teacher retention over the past decade. Rising retention rates however translated to increasing costs, and in 2011, Illinois responded by making it more difficult for a teacher to receive a pension.
Providing Social Security for all public workers would resolve equity issues and gaps in coverage while representing a modest increase in costs for state employers.
Despite strong recent stock market returns and states paying an increased share in annual required contributions, pension funding ratios for state and local plans stayed flat. As states begin using a new accounting standard to measure assets and liabilities, funding ratios are likely to decline.
