A government-worker pension in Illinois is a defined-benefit, or DB, retirement plan under which employees are supposed to receive annual benefits during retirement. In general, a DB plan works by having an employee and employer contribute a set percentage of the employee’s annual salary to a pension fund over the course of the employee’s career. The pension fund invests this money in the stock market – the same markets in which 401(k)s invest. These investments are expected to grow enough to meet the fund’s future pension obligations.
Taxpayers now contribute more than three times what state workers contribute to their own retirements.