We need to re-work the Illinois teacher pension systems.
Who wants to work for nine years in a profession and have no retirement benefits to show for it?
The vast majority of teachers who are relegated to Tier 2 retirement packages face a future that promises inadequate retirement benefits, no access to Social Security, and the very real possibility of needing low-income assistance in retirement.
Illinois legislative leaders passed Tier 2 benefits with almost no serious public debate. And now an entire generation of teachers is getting stuck in a retirement income gap.
Any teacher hired before January 1, 2011 is a “Tier 1” member with adequate retirement benefits. All teachers hired after that date are enrolled in a second class pension plan with less valuable benefits, higher hurdles to qualify for benefits in the first place, and inadequate inflation protection.
For an Illinois teacher hired at age 25 who will work 35 years in the classroom, the lifetime monetary value of a Tier 1 pension is around $1.3 million.
If you were hired after January 1, 2011 and enrolled in Tier 2, the value of a pension after 35 years of teaching is only about $640,000. Why are Illinois teachers being denied equal compensation for equal work?
Retired teachers with Tier 2 benefits are not going to see their pensions keep up with inflation. But pension benefits for Tier 1 teachers will.
TRS actuaries say that a Tier 1 teacher who retires with a $50k pension will see that grow to $100k over 25 years, due to the 3% COLA rule. But a Tier 2 teacher is likely only going to see a $50k pension that grow to around $60k.
In its own 2021 valuation report, TRSIL stated that Tier 2 benefits would lose value in retirement, while Tier 1 benefits would keep pace with inflation.
Join us to close the IL Teacher Retirement Income Gap
Is the Tier 2 Retirement plan
really a retirement plan for all teachers? Illinois needs retirement benefits that work for all teachers.
That is the percentage of new, Tier 2 teachers that TRS and CTPF think will work until their normal retirement age of 67.