49 Comments - dupage dan - Tuesday, Dec 10, 13 @ 10:23 am: === Chicago has been given a pass, with predictable results === What in the current law prevents the “pass” from happening again? Predictable results in (years) 5,4,3,2……. Please don’t point out the part where an institution can file suit. Does anybody here believe that will succeed? - Demoralized - Tuesday, Dec 10, 13 @ 10:25 am: The only thing that will satisfy the IPI is if public employee pensions are decimated or taken away altogether. - Joan P. - Tuesday, Dec 10, 13 @ 10:26 am: “Also, check out IMRF’s status here. Why is that fund in such decent shape? Because municipalities outside Chicago have been forced to make scheduled payments. Chicago has been given a pass . . .” Just to clarify, because I think the above is a bit confusing - neither the City of Chicago nor Cook County is part of IMRF. - Demoralized - Tuesday, Dec 10, 13 @ 10:27 am: Also, you know the IPI would throw a fit if corporations had money taken away from them through taxes, but they are more than ok with money being taken away from people’s pensions. - Union Man - Tuesday, Dec 10, 13 @ 10:29 am: Just think where the pension systems would have been if the state paid just 75% of the required payments!! The General Assembly better get Chicago in line next term as they are in worse shape overall then the other pension systems. - Nieva - Tuesday, Dec 10, 13 @ 10:33 am: This will be the second cut in my retirement in less than a year. Almost a 90 dollar cut in July to pay for insurance that was supposed to be paid for life after 20 years. Now in July I will receive less than promised in my annual raise. I would have continued working until social security age if I had known these cuts were coming. If the income tax increase is allowed to expire we can expect more cuts and much higher insurance costs. - E Man - Tuesday, Dec 10, 13 @ 10:35 am: No one will accuse me of being well versed in pension reform. Having said that, I ask: with sides being taken and the word overhaul being tossed around, I’m not seeing any movement toward resolution. To the question: why cannot the sides come together and address one issue at a time they can agree on or come to resolution? Fix the issue one step at a time. What’s the saying, can’t run till you walk?? No one will be a hero with pension reform. How about taking it slowly and actually accomplishing some progress? I know. I’m asking for mature and responsible behavior. - Norseman - Tuesday, Dec 10, 13 @ 10:38 am: Well said Demoralized! - Angry Republican - Tuesday, Dec 10, 13 @ 10:38 am: So is Ben V arguing for a progressive income tax? Would axing retirement income and a progressive income tax make Ben happy? As always, be careful what you wish for. - was almost a retiree - Tuesday, Dec 10, 13 @ 10:43 am: Not everyone retires from the state in their 50s nor do they get a pension of $30,000. Someone who enters the state workforce later in life may only work 10 years. Do you realize their COLA will be $240 a year. That same person with a 4 year average of $40,000 would also get a $6,680 pension. This is more the ‘real world’ retiree, not the $30,000 or more per year pension. - Chris - Tuesday, Dec 10, 13 @ 10:47 am: ” the IPI would throw a fit if corporations had money taken away from them through taxes, but they are more than ok with money being taken away from people’s pensions” And everyone is ok with the money coming from working stiffs? - Chris - Tuesday, Dec 10, 13 @ 10:52 am: “The only way out, other than massive tax increases, is 401(k). In fact, the only way for current workers to collect what is vested and ensure existing retiree checks don’t start bouncing is to convert to a 401(k)-style system for current workers.” Has anyone done an analysis of the ‘transition’ costs of this? If all current workers were given a 401k account in an amount of their (supposed to be) total contributions plus interest based on some benchmark, that would certainly take all of the $$ in each underfunded plan, but the question is how much more than that? And then, what is the annual cost of funding the benefits for those still in the plan, plus the then-required social security contributions, plus whatever 401k match is determined to be sufficient? I have not seen the cashflow analysis for this ‘plan’ (maybe just not looking hard enough!), but I doubt those tossing this BS around have, either. The likelihood that the ‘401k plan’ would actually reduce near term state expenses is pretty slim. But it would certainly be better in 25 year–just like the bill that passed. - GA Watcher - Tuesday, Dec 10, 13 @ 10:58 am: Another reason why IMRF is in better shape is the fact that benefit levels have been exceedingly stable over the years. Overall costs to municipal governments is much more predictable as a result. This is unlike the police and fire systems where the General Assembly passes benefit increases every 3-5 years. - Obamas Puppy - Tuesday, Dec 10, 13 @ 11:27 am: 401 ks have been exposed for what they are and that is well marketed savings plans not retirement plans. Gotta love how Social Security coverage never passes the lips of the IPI crew, of course that would lead to a problem in fundraising. shhhhh - reformer - Tuesday, Dec 10, 13 @ 11:35 am: IMRF retirees enjoy an annual COLA of 3%, non-compounded. For some reason IPI doesn’t go after the IMRF benefits. Chris points out the consequences of immediately pulling current workers out of the pension system. Their contributions to the system would stop, providing a smaller investment fund. Would anyone suggest the solution to the huge unfunded liability of Social Security is to immediately pull current workers out of SS and put them into a 401K? - Chavez-respecting Obamist - Tuesday, Dec 10, 13 @ 11:42 am: If I had a state or local government retirement “plan” I wouldn’t have a problem converting that to a 401k/403b as long as I got a fair deal out of it. One of the main reasons I like mine is the money is there. The place where I work *can’t* not put the money they take out of my paycheck plus their match in my account. - langhorne - Tuesday, Dec 10, 13 @ 11:43 am: “This bill continues to pay cost-of-living adjustments, or COLAs, to five- and six-figure pensioners,” – really? “five figure pensions” are what he wants to attack? thats, um, $10,000 for starters. pretty damn “rich” all right. what is an acceptable amount of pension income for these folks? does $53,000,000 sound about right? - RNUG - Tuesday, Dec 10, 13 @ 11:48 am: Let’s see … $10,000 is a five figure pension. Guess giving a COLA on that amount is too generous. - RNUG - Tuesday, Dec 10, 13 @ 11:51 am: Joan P. - Tuesday, Dec 10, 13 @ 10:26 am: Actually, a lot of organizations are exmept from being in IMRF. For example, as another commener pointed out some time back, police departments in towns with a population greater than 5,000. - RNUG - Tuesday, Dec 10, 13 @ 11:54 am: E Man - Tuesday, Dec 10, 13 @ 10:35 am: Because the legal, moral and mathmatical solution, pay what is owed, requires tax hikes beyond the current 5% rate and will result in current members of the General Assembly losing office. - RNUG - Tuesday, Dec 10, 13 @ 11:56 am: Chris - Tuesday, Dec 10, 13 @ 10:52 am: As I explained the other day, if the State had the cash to fully convert to a 401K type plan, paying what should be there for each person, the State would have the cash in the current plans and there would be no problem. - walkinfool - Tuesday, Dec 10, 13 @ 12:00 pm: Why anyone pays any attention to IPI or Heartland at this point, is beyond me. - wordslinger - Tuesday, Dec 10, 13 @ 12:06 pm: IPI and Heartland aren’t really interested in facts — they’re just trolling for cash. - RNUG - Tuesday, Dec 10, 13 @ 12:08 pm: I open the IPI emails just to see the latest propaganda before circular filing them … - Name/Nickname/Anon - Tuesday, Dec 10, 13 @ 12:08 pm: It makes no sense for the Pension systems to go to a DC plan. If IPI thinks public pensions are obsolete, they should be pushing to close the plans and put everyone into Social Security. Then the employer can have additional optional DC benefits (as they do now). Since that isn’t their plan, I can only assume that they are a front for investment managers to get as much $$ as possible. - Person 8 - Tuesday, Dec 10, 13 @ 12:24 pm: Any word on the rule of 85 yet? Sorry little off topic. - Joan P. - Tuesday, Dec 10, 13 @ 12:26 pm: @ RNUG - Yeah, I’m aware of that. I just referenced Chicago/Cook County because of the “Chicago gets a pass” language. - PoolGuy - Tuesday, Dec 10, 13 @ 12:28 pm: and it’s the seven and eight figure a year guys who want to be in charge to decide the fate of those poor yet overpaid five and six figure a year people - RNUG - Tuesday, Dec 10, 13 @ 12:32 pm: Joan P. - Tuesday, Dec 10, 13 @ 12:26 pm: Understand. Chicago gets a pass on a lot of stuff. I was reading a “sob story” today about how Chicago might have to more than double their property taxes to deal with their pension problem. Nowhere in the story did it mention that the Chicago property taxes are based on 1/6 assessed value as opposed to downstate where the taxes are based on 1/3 assessed value. - JohnTwig - Tuesday, Dec 10, 13 @ 12:43 pm: Speaking of misinformation about Illinois public pension systems, Speaker Madigan recently labeled them as “too rich” and the Champaign News-Gazette editorial page calls them an “unaffordable monstrosity” that “guarantees too much to too many for too little”. I have been searching for several years for the evidence to back up these opinions, but nobody has come forward with the numbers. Therefore, I can only conclude this tale is a hoax designed to cover up past mistakes (dare I say malfeasance?) on the part of our elected representatives. I’m a 20+ year retiree under SURS and had that plan been correctly funded, as designed, it would have been a great bargain for employees, retirees and also Illinois taxpayers. While politicians won’t show you the numbers to prove a “crisis” I am glad to show you what could have been had SURS (and other systems) been correctly funded. Take a look at the link below, It goes back a few years but is still valid. http://www.geocities.ws/johnt_suaa/taletwo.pdf - Chris - Tuesday, Dec 10, 13 @ 12:48 pm: “I was reading a “sob story” today about how Chicago might have to more than double their property taxes to deal with their pension problem. Nowhere in the story did it mention that the Chicago property taxes are based on 1/6 assessed value as opposed to downstate where the taxes are based on 1/3 assessed value.” RNUG: Chicago property taxes could be based on 1,000,000 times assessed value, and it wouldn’t change the tax bills–the rate is determined by aggregate levy divided by aggregate equalized assessed value. So, if there are much higher assessed values (assuming exactly the same distribution of individual values), the mill rate simply decreases, and everyone pays the same amount in tax. - Robert the Bruce - Tuesday, Dec 10, 13 @ 1:48 pm: “There are nearly 35,000 retirees who receive more than $70,000 in annual pension benefits.” according to IPI from the Intelligencer article Rich linked to. I hadn’t realized there were that many over $70k - but I don’t trust IPI so I wonder if it is true? - Chris - Tuesday, Dec 10, 13 @ 2:01 pm: “I hadn’t realized there were that many over $70k ” If that is true, that’s over $2.5 billion in annual cost just for them. So, how is the conversion to 401k supposed to be a cost saver (when one *necessarily* counts FICA and 401k match as substitute budget items) in the near term? - Ready To Get Out (soon) - Tuesday, Dec 10, 13 @ 2:55 pm: Chris…..If you’re interested, go to the BGA site and and enter the dollar range to get a count. http://www.bettergov.org/pension/ - Capncrunch - Tuesday, Dec 10, 13 @ 2:59 pm: According to the fiscal 2012 annual reports, there were 18,271 TRS and 6,247 SURS retirees receiving a pension of $72,000 or more. There were 703 SERS retirees receiving over $90,000. TRS had 4,890 retirees receiving over $96,000. - wordslinger - Tuesday, Dec 10, 13 @ 3:14 pm: –According to the fiscal 2012 annual reports, there were 18,271 TRS and 6,247 SURS retirees receiving a pension of $72,000 or more. There were 703 SERS retirees receiving over $90,000. TRS had 4,890 retirees receiving over $96,000.– That raises the question of….. So what? What were their jobs, what were their contracts? There’s no secret that you can find hinky deals with double-dippers and such. Relatively few. But if if the State of Illinois, schools, hospitals and such are putting PhDs on the payroll, I’m not too shocked they have decent pensions. It’s one of the many costs of civilization. What it has to do with hosing cops, firemen, janitors and teachers is beyond me. - funny guy - Tuesday, Dec 10, 13 @ 3:14 pm: The City of Chicago should sell O’Hare to fund the pensions–pass it on. The City is sitting on a $7-10 billion asset (guess based on Midway’s value), that doesn’t contribute $1 to the City’s budget pursuant to federal law (unlike parking meters). Of course, the City wants to keep the patronage of construction contracts and concession agreements to dole out to friends. This is why the scare tactics of a potential bankruptcy is a farce. I would love to see the City required to open its books and list its assets. - Chris - Tuesday, Dec 10, 13 @ 3:33 pm: “go to the BGA site ” The highest pension ($426k) is going to the *current* head of the UIC dept of surgical oncology. His state salary is apparently $81k, so he’s at least semi-retired. - Anonymous One - Tuesday, Dec 10, 13 @ 3:47 pm: So what if people who honestly earned advanced degrees and earned their high pensions get them? Since when do people get to sit in judgment of how much they think someone else is worth? Too bad everyone who earns a paycheck doesn’t get their financial package published in the paper so we all can discuss whether they’re worth it or not. I mentioned that once to a Trib reporter and asked her what her credentials and compensation were so I could evaluate whether or not she was worth that amount of money and lo and behold, she wouldn’t divulge. Certainly far more than any teacher, cop, firefighter, I’m sure. When it only works one way, it’s fine. Most people griping about pensions are probably sitting on a mountain of retirement savings and 401Ks and social security and maybe even a private pension too, but they wouldn’t tell you that. - Anonymous One - Tuesday, Dec 10, 13 @ 3:50 pm: After all, look at Brucey. 53 million and he’s got a gripe with folks earning 30, 40k pensions. What’s up with that? - RNUG - Tuesday, Dec 10, 13 @ 4:02 pm: Chris - Tuesday, Dec 10, 13 @ 12:48 pm: Not necessarily. I don’t know about the Chicago taxing authorities but in some places downstate there are caps on how high the RATE can be … so the assessed valuation matters greatly. - Chris - Tuesday, Dec 10, 13 @ 4:55 pm: “Not necessarily. I don’t know about the Chicago taxing authorities but in some places downstate there are caps on how high the RATE can be … so the assessed valuation matters greatly.” RNUG–well, in Chicago, it’s levy/aggregate EAV. And if the EAV went up, the rate would go *down*, which, in your scenario, would leave more room before hitting the rate cap. And, yes, in Chicago–which is what you were talking about in your reference to a ’sob story’–it is *necessarily* true. - DuPage Dave - Tuesday, Dec 10, 13 @ 7:07 pm: Here’s another pitch for a haircut tax, i.e. a service tax for Illinois. COGFA says it will bring in $4 to $8 billion a year depending on the rate and which services are taxed. Those guys know their stuff. So if you pay a 50 cent tax on a $10 haircut is that going to be such a problem? Are you going to drive to Kentucky to get your hair cut? So since we need money in Illinois we need to pass a service tax. Dedicate the revenue to funding the pension deficits for 20 years. I hope the legislature gives this some serious consideration when the supreme court shoots the new law down as unconstitutional. - RNUG - Tuesday, Dec 10, 13 @ 7:37 pm: DuPage Dave - Tuesday, Dec 10, 13 @ 7:07 pm: The math works but not the politics. Politically speaking, part of the “haircut” money would need to be “free” for the pols to dole out some pork back home. - facts are stubborn things - Tuesday, Dec 10, 13 @ 8:21 pm: =few minor tweaks to retirement age and COLAs.”= My pension is being reduced by $700,000 over the next 30 years. That assumes inflation runs at it historical average of about 3%. I would call that more then a minor tweak. - facts are stubborn things - Tuesday, Dec 10, 13 @ 8:24 pm: @- RNUG - Tuesday, Dec 10, 13 @ 11:56 am: = if the State had the cash to fully convert to a 401K type plan, paying what should be there for each person, the State would have the cash in the current plans and there would be no problem.= Exactly, where do these fools think the money is going to come from if all these new or exisiting employees quit paying into the pension system? - RNUG - Tuesday, Dec 10, 13 @ 8:31 pm: Editoral in today’s NYTimes on internet sales tax: A Season for Sales Taxes http://www.nytimes.com/2013/12/10/opinion/a-season-for-sales-taxes.html?nl=todaysheadlines&emc=edit_th_20131210&_r=0 Note: you have to be a registered user to access most NYT content but they do allow viewing of a limited amount of articles for free once you register - RNUG - Tuesday, Dec 10, 13 @ 9:40 pm: facts are stubborn things - Tuesday, Dec 10, 13 @ 8:21 pm: Not surprised at your estimate; I constructed a speadsheet the other day and played around with various examples. If you go out 35 years or have a quite large pension or assume the future average CPI-U is significantly less than 3% (I’ve used as low as 1.5% in some examples), then you can easily calculate diminishment examples in 7 figures. Just as a reminder, the calculator linked to the other day on one of the university sites appeared to assume a 3.2% CPI-U going forward. If the current low inflationary period (or at least a low calculated CPI-U) continues, you will have a diminishment greater than you might be guessing right now. - facts are stubborn things - Wednesday, Dec 11, 13 @ 8:11 am: @RNUG - Tuesday, Dec 10, 13 @ 9:40 pm: =If you go out 35 years or have a quite large pension or assume the future average CPI-U is significantly less than 3% (I’ve used as low as 1.5% in some examples), then you can easily calculate diminishment examples in 7 figures.= Great point, I can ajust the CPI on my spread sheet and yes it makes a huge difference. Sorry, comments for this post are now closed.