Pension Pains: States Cut Benefits

Posted By on April 27, 2010

Pension Pains: States Cut Benefits to Skirt Massive Funding Shortfall
Illinois Teachers Complain; California Latest State to Push for Pension Reform

Apr. 26, 2010

Dan Montgomery doesn’t have many kind words for his elected officials. The high school English teacher from Skokie says Illinois politicians spent years neglecting their obligations to the state’s public pension funds and now want workers to foot the bill.

“It’s terrible,” said Montgomery, who has been teaching for 17 years.

Illinois recently cut benefits and raised retirement ages for public employees in order to cover a $78 billion shortfall in its public pension fund.

“We really fought it, but in the end they did it anyway,” Montgomery said.

States around the country are beginning to face the necessity of reforming their public pension systems, after the financial crisis took a bite out of already inadequate savings and put a seemingly insurmountable gap between assets and the benefits that governments had promised their workers.

Illinois is one of the most recent states to tackle its shortfalls, with a reform that the government says is expected to save taxpayers more than $200 billion over 35 years.

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