Today’s quotable
Monday, Oct 2, 2023 - Posted by Rich Miller
* Associated Fire Fighters of Illinois President Chuck Sullivan testifying in a House committee last week about pensions…
* Please pardon all transcription errors…
Records will indicate that the AFFI was adamantly opposed to any changes to the pension fund of our future members in 2010.
I want to very respectfully remind this committee what your firefighters do, what we have done and what we will continue to do.
Our job is a difficult and demanding one that takes a tremendous toll on us physically and mentally.
When someone calls 911 - again, depending on the nature of the emergency - this is what they expect. They want an Olympic athlete, they want a chemist, a doctor, a mechanic, an HPA specialist, an electrician, a gas expert, a middle linebacker, an arborist, an expert swimmer and a social worker, all wrapped into one person. That’s us. That’s us.
That caller wants us there now. They want their emergency mitigated now. And quite frankly, they deserve that request.
- Gruntled University Employee - Monday, Oct 2, 23 @ 9:09 am:
Anecdotally, Tier 2 pensions are the biggest point of contention when hiring within my department. We have had almost 20 failed employment searches just in the last year and a half. No one (especially those under 25) want to have to wait until they’re 67 before they can fully retire.
- Captain Obvious - Monday, Oct 2, 23 @ 9:22 am:
Tier 2 is inequitable and unfair for all employees, not just first responders. Any change in Tier 2 should apply across the board. Would be great to see AFSCME join this fight.
- James - Monday, Oct 2, 23 @ 9:38 am:
Instead of realizing that Tier 2 helped get Illinois back on track financially, we want a return to the same failed policies that helped make Illinois a financial laughing stock. Every Illinois that isn’t in the public sector ought to be vehemently opposed to this. I often hear my democratic friends say “we won’t go back” on various issues. I agree with them, we shouldn’t go back in time on Tier 2.
- Almost the Weekend - Monday, Oct 2, 23 @ 9:40 am:
Tier 1 needs to have skin in the game if they are going to just declare Tier 2 adjustments need to be made.
- very old soil - Monday, Oct 2, 23 @ 9:46 am:
Almost/ What do you mean?
- Flyin'Elvis'-Utah Chapter - Monday, Oct 2, 23 @ 9:47 am:
How anyone thought having first responders, prison guards, and mental health techs work well into their sixties would attract employees is beyond me.
- Donnie Elgin - Monday, Oct 2, 23 @ 9:49 am:
Two truths here. We all love firefighters and unions will lobby for more generous pension benefits.
- Lurker - Monday, Oct 2, 23 @ 9:51 am:
State workers and teachers going to 67 is crazy too. And applicants are figuring that out quickly. We have 64 open positions infilled for almost 4 years. It wears you down.
- DuPage - Monday, Oct 2, 23 @ 9:58 am:
California “reformed” their teacher’s pension system for new employees, but not nearly as much. They raised their retirement age from 60 to 62.
- JS Mill - Monday, Oct 2, 23 @ 9:59 am:
Tier 2 is a problem, but it is not THE problem. The narrative and political vitriol directed at public employees of any kind brought on by (mostly) right wing rhetoric is also a bog part of the reason. The sensibilities toward employment by millenials and gen z have had a major impact on staffing issues as well.
But yes, let’s fix Tier 2.
- H-W - Monday, Oct 2, 23 @ 9:59 am:
At some point, we either have a pension plan, or an 401/403 IRA retirement plan. Tier 2 is neither of these things in the context of allowing workers to retire with dignity.
As a Tier 1 worker, I have been able to plan my retirement knowing my pension amount will be sufficient after 20 years (supplemented by 30 years of paying into Social Security prior to joining state employment).
Tier 2 people cannot count on that same peace of mind. Either make Tier 2 a bona fide pension plan, or stop pretending we are taking care of our state employees’ futures. If we are not, then IRA is the way to go, along with Social Security payments.
- Jocko - Monday, Oct 2, 23 @ 10:11 am:
==we shouldn’t go back in time on Tier 2.==
How do you plan on attracting and retaining staff until 67? Pizza parties, certificates, and plaques?
- Homebody - Monday, Oct 2, 23 @ 10:20 am:
I’ve been a state employee for approximately a decade. I’ve just accepted that it does not make sense to stay in state employment beyond my current job, from a purely financial perspective. It isn’t JUST the pensions, it is that for anyone who has a marketable skill in the private sector, you will almost always make a ton more money there. I expect my salary to basically double when I leave my SPSA job.
And that is without getting into all of my substantive gripes about working in state employment, having to deal with CMS and DoIT all the time.
- DTownResident - Monday, Oct 2, 23 @ 10:20 am:
Tier 2 employees also have a 403(b) they can contribute to. That is an equivalent to a 401k. There is no matching for it currently but it is there, at least for teachers. The only proposals in the legislature for switching to that I have seen were worse than Tier 2. Lower contribution percentages and still no social security along with it. That can be a safety net for market downturns like in the private sector. Tier 2 should be modified but not sure what that should be.
- Arsenal - Monday, Oct 2, 23 @ 10:22 am:
==No one (especially those under 25) want to have to wait until they’re 67 before they can fully retire.==
I mean, I hear ya, but who is offering something better? The private sector is a horror show for retirement.
- James - Monday, Oct 2, 23 @ 10:22 am:
Please…the idea that these public sector jobs are not attractive is absurd. The vast majority of jobs across the market place don’t have the luxurious health benefits, retirement packages, paid time off, etc etc that these jobs do. The lack of interest in the jobs is a cultural shift, and has nothing to do with the payment and benefits being marginally different.
- Donnie elgin - Monday, Oct 2, 23 @ 10:26 am:
How do you plan on attracting and retaining staff until 67 -
It’s a guaranteed pension which is rare. With the 30 years/age 67 provisions second career folks who are in their 30’s would find this appealing.
- DTownResident - Monday, Oct 2, 23 @ 10:28 am:
For teachers, current overcrowding of classrooms, underfunding, and the resegregation, covid catch-up are greater issues than this. So is the perpetual culture war bashing teachers and schools. That demoralizes a lot. Calling them “communist indoctrinatora’ and the bashing of schools with lots of low income students from the Illinois Freedom caucus and others hurts a lot too.
- H-W - Monday, Oct 2, 23 @ 10:31 am:
On the question of waiting until one is 67 until one can draw upon a retirement account or pension, I have never been a fan of “early” retirement. I understand why we might say “62 with a reduced payment” and permanently disabled people should be allowed to retire. But for healthy individuals, I think a lifetime of work before retiring makes sense. Allowing people to retire at 50 after 30 years in Tier 1 is surely a part of the funding gap. At 67, I will not have paid in as much in 20 years of contributions as I withdraw for the last 15-20 years of my life. Those who retire even earlier that 65 or 67 cost the pension system even more (unless they die early).
As to young people unwilling to wait until they are 67 to retire, perhaps their ideas about what a retirement/pension system is supposed to be needs to be adjusted.
- Cool Papa Bell - Monday, Oct 2, 23 @ 10:33 am:
=The private sector is a horror show for retirement.=
When the private sector pays better, offers improved work-life balance, offers jobs where you don’t get shot at, run into burning buildings, yelled at by parents for double bus routes, shamed for taking a break - the “horror show” levels out.
- Stormsw7706 - Monday, Oct 2, 23 @ 10:35 am:
Tier 2 retirement, especially working to age 67 is hampering teacher entry and ongoing employment. A solid retirement used to be the light at the end of the tunnel now it is an approaching freight train. The job is physically and mentally taxing and the rules and regulations from the State and Feds make it impossible to get your work done in a standard day. I support the firefighters and police requests but teachers deserve equal status. All are being shortchanged.
- Flyin'Elvis'-Utah Chapter - Monday, Oct 2, 23 @ 10:38 am:
“perhaps their ideas about what a retirement/pension system is supposed to be needs to be adjusted.”
Er, no. Employers for these extremely hazardous jobs need them, not the other way around.
It’s called leverage. You have it, or you don’t.
Tier 1 was leverage.
- DuPage - Monday, Oct 2, 23 @ 10:38 am:
@9:59 === If we are not, then IRA is the way to go, along with Social Security payments.===
IRAs are limited and can lose money if the economy slows down. It is good as a supplement but cannot be depended upon. 401Ks and 403bs are a little better than IRAs, but still does not take the place of a pension.
- Arsenal - Monday, Oct 2, 23 @ 10:44 am:
==When the private sector pays better, offers improved work-life balance, offers jobs where you don’t get shot at, run into burning buildings, yelled at by parents for double bus routes, shamed for taking a break - the “horror show” levels out.==
Perhaps, but GUE (who, based on the name, may not be a firefighter?) identified Tier 2 as “the biggest point of contention when hiring”.
- Jocko - Monday, Oct 2, 23 @ 10:49 am:
==second career folks who are in their 30’s would find this appealing.==
And yet over 30% of posted teacher, special education and support staff positions went unfilled or were filled with a less-than-qualified hire. Care to guess why?
- RNUG - Monday, Oct 2, 23 @ 11:10 am:
We’ve hashed over the Tier 2 pension problems from Day 1. As bad as it is, it is still better than a lot of the private sector. And sooner or later, the benefits will have to be enhanced to avoid the SS problem.
Specifically to State employees, along with the pension itself, their is also the Deferred Compensation plan. Not many people realize that 457 plan has a couple of advantages over a traditional 491k / 403b plan. Yes, it is still only your personal money going into the plan. Yes, it doesn’t have any kind of match. But it is still a tax deferred plan. And, unless the rules have changed (I can’t find where they have), you can withdraw money from a 457 plan at *any* age with no penalty; the only requirements are you must no longer be employed by government and, like 401/403 you have to pay normal taxes on the withdrawal.
I expect you will see the retirement age backed down for life / safety positions at some point in the next 5 years or so. And maybe in 10 years the Tier 2 AAI will have to get adjusted upward.
- DuPage - Monday, Oct 2, 23 @ 11:16 am:
@10:31. ===At 67, I will not have paid in as much in 20 years of contributions as I withdraw for the last 15-20 years of my life. Those who retire even earlier that 65 or 67 cost the pension system even more (unless they die early).===
What you pay in, plus employer match, is invested by the pension system usually at a good rate that is compounded interest. Retirees getting more dollars out then their contribution into the system is not the problem. The state is considered the employer for most of the TRS. The problem was caused by the state not putting in the employer share, year after year. Instead, the state “borrowed” that money and owe it back to the retirement systems, with interest. Similar to someone using a “skip payment option” on credit cards or mortgages. The amount owed shown on a chart curves upward until it is going almost straight up. For more details on this, ask any math teacher.
- Norseman - Monday, Oct 2, 23 @ 11:20 am:
JS Mill +1
- SuburbanRepublican - Monday, Oct 2, 23 @ 11:46 am:
Not a lot of talk on here about how we pay for increasing these benefits.
- Rich Miller - Monday, Oct 2, 23 @ 11:47 am:
===Not a lot of talk on here===
You’re free to talk. How about discussing that instead of just posting a goofy drive-by?
- Retired School Board Member - Monday, Oct 2, 23 @ 11:52 am:
Teaching well is exhausting work. If anyone thinks that the marjority of 67 year old teachers are teaching with enthusiasm, vigor, and rigor… Plus, how are you going to attract new teachers to the profession if they are expected to do this very taxing work for over 40 years? If you want high quality teachers, rethinking Tier 2 is fundamental on at least two fronts. Tier 2 is not good for students. Not good for educational outcomes.
- duck duck goose - Monday, Oct 2, 23 @ 12:07 pm:
Where is this 67-year’s number coming from? The firefighter pension is set forth in 40 ILCS 5/4-109. That statute says nothing about increasing the retirement age. The changes made by P.A. 96-1495 (which established tier two) don’t increase the firefighter retirement age to 67.
- H-W - Monday, Oct 2, 23 @ 12:09 pm:
===If anyone thinks that the majority of 67 year old teachers are teaching with enthusiasm, vigor, and rigor===
Some do, some don’t. That also applies to young teachers, mid-career teachers, etc., right?
I can’t understand why teachers (I teach) should be led to conclude early retirement at 50-55 should be normal. Perhaps firefighters and some police (not all), but teaching is a different beast.
In addition, when teachers “retire” at 55, are they actually retiring, or are they changing jobs. I would suggest the latter does not warrant retirement income. Retiring means leaving the labor market permanently. At least, historically that has been the intended meaning behind creating pensions and retirement accounts.
I agree with the statement that early retirement is (currently) less of a burden that the failure to fund. But that does not mean early retirement from a pension plan is problematic in terms of fiscal liabilities to the state.
- Honeybear - Monday, Oct 2, 23 @ 12:26 pm:
Look I’ll be honest. Going to 67 is a long haul. That gives me 14 more years of service. If it’s what I gotta do…well it’s what I gotta do for my pension. But it’s hard.
- Frida's boss - Monday, Oct 2, 23 @ 12:31 pm:
Change everyone back to Tier 1 but the cost of going back to Tier 1 is no more 3% compounded cost of living allowance just a 3% simple cost of living allowance. Retirement age, go back to Tier 1, healthcare option go back to Tier 1.
The 3% compounded cost of living allowance over the life of retirement is the main driver of the pension debt. It’s not the state skipping a few payments.
- workingfromhome - Monday, Oct 2, 23 @ 12:38 pm:
We should retire the word “retire.” I’m 56, Tier 1 and I hit Rule of 85 in 16 months. Then I’m out and on to my next chapter, which not working is definitely not it.
- Appears - Monday, Oct 2, 23 @ 12:41 pm:
The State spent DECADES missing payments. That was and is the driver of the debt.
- Appears - Monday, Oct 2, 23 @ 12:44 pm:
The State does not pay the best wages. People with any kind of marketable skill will make more in the private sector. As in the case of physicians, they can make at least double the salary in the private sector.
- Jocko - Monday, Oct 2, 23 @ 12:47 pm:
With respect to H-W and others, let’s do the math.
College grad (22yo) + 45 (years of work) = 9.8 years retirement (76.8 life expectancy)
- very old soil - Monday, Oct 2, 23 @ 1:12 pm:
Jocko,
Your math is fine, but you are misreading the actuarial table. At age 67, males have another 15.68 years; females 18.10. https://www.ssa.gov/oact/STATS/table4c6.html
- It's always Sunny in Illinois - Monday, Oct 2, 23 @ 1:54 pm:
No hard data to support, but I think a majority of Illinois Taxpayers which are Non-Government participating Pensioners would agree…..do whatever you need to do to make it work……just do it with the current tax levels/revenue.
- Hannibal Lecter - Monday, Oct 2, 23 @ 2:18 pm:
=== Change everyone back to Tier 1 but the cost of going back to Tier 1 is no more 3% compounded cost of living allowance just a 3% simple cost of living allowance. ===
I think current Tier 1 people would object to that.
- cermak_rd - Monday, Oct 2, 23 @ 2:21 pm:
I work in the private sector. I earn a decent amount. Have changed jobs 6 times during my career. Longest post was 13.5 years currently on 7.
So I have earned more in the private sector than the state would have paid me, with comparable benefits. I have a 401K with a match that will provide a decent retirement. The one thing the state provides with Tier2 is more job security, but that’s not a lot in today’s economy. People my age are used to changing jobs and findinig new positions.
- Hannibal Lecter - Monday, Oct 2, 23 @ 2:24 pm:
=== At age 67, males have another 15.68 years; females 18.10. https://www.ssa.gov/oact/STATS/table4c6.html ===
Isn’t life expectancy going down now post-COVID? I personally have seen some serious health scares occur over the past year for people I know in my parents age range - 65-70. People do not want to spend their later years working a job that they do not enjoy. And post-COVID the number of people that I know that truly enjoy their jobs is rapidly declining.
- Hannibal Lecter - Monday, Oct 2, 23 @ 2:26 pm:
Here is a link re: lower life expectancies, which jives with what Jocko said.
https://www.cdc.gov/nchs/pressroom/nchs_press_releases/2022/20220831.htm#:~:text=Other%20findings%20documented%20in%20the,2020%20to%2073.2%20in%202021.
- Hannibal Lecter - Monday, Oct 2, 23 @ 2:28 pm:
=== I have a 401K with a match that will provide a decent retirement. ===
A 401(k) can’t hold a candle to even a Tier 2 pension. Even with a match. Unless you are a business owner and can max out your solo 401(k) match.
- A - Monday, Oct 2, 23 @ 2:35 pm:
401k with Social Security plus individual IRA and other savings surely trumps Tier I……..unless you didn’t make any plans for your retirement
- A - Monday, Oct 2, 23 @ 2:40 pm:
Without Social Security benefits, a pension is IT!
Given the paltry paychecks (in most districts) of people like teachers, there is nothing/little left for an IRA once you pay for necessities. People like to point out the highest paying districts as if that’s the norm. Sloppy thinking.
But convenient.
The saavy newer generations look at this. Certainly a big part of teacher shortage.
- Hannibal Lecter - Monday, Oct 2, 23 @ 2:51 pm:
=== 401k with Social Security plus individual IRA and other savings surely trumps Tier I……..unless you didn’t make any plans for your retirement ===
Show me the math.
- FTC - Monday, Oct 2, 23 @ 3:50 pm:
I have two adult children who in the last few years both entered the workforce. Much to my chagrin, neither one of them (and none of their friends for that matter,) considered the retirement package being offered by any prospective employers. They barely know what a pension is.
Perhaps the less generous tier 2 benefits become an issue in regards to retention with employees in mid-career, but I just don’t see it being a problem with recruiting entry-level employees..
- SheWhoIs - Monday, Oct 2, 23 @ 6:43 pm:
I have maxed out my 401K for a long time. Was told by a very wise man (Dennis) at ComED (first gig) to take my raises and apply them to 401K until max is reached. I did that. Now, since I’m old as dist, I can contribute even more. So I’m not sure 401K is that bad. Plus soc sec. with 401K. Plus other savings and investments.
- RNUG - Monday, Oct 2, 23 @ 8:50 pm:
== Change everyone back to Tier 1 but the cost of going back to Tier 1 is no more 3% compounded cost of living allowance just a 3% simple cost of living allowance. ==
Five minutes spent on reading the IL SC decisions (Kanerva, etc) will tell you that you can not modify current Tier 1 pensions.
Or maybe you meant to say take Tier 2 to Tier 1 minus, where you get most the Tier 1 benefits but not the 3% compounded AAI (automatic annual increase)? That is conceivably legal as the court has interpreted the IL Constitution Pension Clause.