* Regarding the pension reform bill…
“This bill continues to pay cost-of-living adjustments, or COLAs, to five- and six-figure pensioners,” [Ben VanMetre, a senior budget and policy analyst with the conservative-leaning Illinois Policy Institute] wrote.
Wow. Imagine that. Retirees with a $10,000 a year pension are still getting some form of cost of living increase? How horrible!
And “six-figure pensioners” are actually taking a big whack on their COLAs. Huge, even.
“Illinois’ faux pension reform bill is being heralded by many as real ‘fundamental reform’ but the minor changes being proposed are not significant or ‘extreme,’” wrote John Northdurft, director of Government Relations for the Heartland Institute.
“The fundamental problem with the current pension system in Illinois is the unsustainable ‘defined-benefit’ pension plan system, which goes practically untouched by the proposal except for a few minor tweaks to retirement age and COLAs.”
Defined benefit plans are actually sustainable in states that haven’t skipped or shorted payments. 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, with predictable results.
…Adding… I meant to post this e-mail and forgot…
I hope you’re doing well, and have enjoyed the holidays, so far.
I wanted to provide some clarification- from your post on Friday: “The proposal says that ‘Mayor Emanuel has privately expressed the need for 401(k)-style changes to truly achieve reform.’”
This is accurate. He has expressed it privately, of which we became aware (and no, we did not become aware of this from any candidate for office).
The main contents of our grant proposal have been the core of much of our work for many years, of which you are well aware.
Members of our team did have a meeting with the Mayor’s staff on Sept. 30 to discuss this topic, which was long after we submitted that grant proposal.
The mayor faces very difficult challenges on how to solve the city’s financial crisis. 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. That remains true with the state and it is true for the city – as it is with most state and local governments around the country.
Finally, here are links to Rahm’s public statements on the matter of 401(k) choices:
Please feel free to contact me directly if you have any questions.
Senior Director of Government Affairs
Illinois Policy Institute