* Illinois News Network…
State Rep. Robert Martwick, D-Chicago, held a hearing in Springfield to get testimony from various pension boards for police, fire, local government employees and teachers.
The issues, he said, could lead the state’s Tier II pensions to be found by the federal government to be insufficient for retirees. He equated it to a “landmine.”
“If that happens, it could create an instant and massive debt to the state of Illinois,” Martwick said.
* Hoo boy…
The concern, however, is that Illinois teachers do not participate in Social Security. Federal law allows state and municipal governments to do that, as long as the benefits they pay out are at least equal to what Social Security pays, a law known as the “safe harbor” provision.
But Andrew Bodewes, TRS’ legislative director, told the panel that because of the small cost-of-living increases built into Tier 2, those pensions soon are likely to fail to meet the federal adequacy test.
“So that means once the Tier 2 teachers are retiring, each and every school district will have to perform a test on that member to see if they get a benefit at least as good as Social Security,” he said. “And if they don’t, they (the school districts) will have to enroll in Social Security. They’ll have to enroll going backwards.”
That means school districts would have to make as much as 10 years’ worth of back payments into Social Security.
And that bomb could start detonating in two short years.
The future always has a nasty habit of arriving.