Tier 2 emails, calls inundating legislators
Thursday, Apr 18, 2024 - Posted by Rich Miller
* Public employees are being encourage by social media posts and other ways to fill out an email form at the Illinois AFL-CIO’s website to “fix” the Tier 2 pension system. Here’s the pitch they get on that website…
In 2010, the Illinois General Assembly created a “Tier 2″ of separate, lower pension benefits for public employees hired after 2011, over the fierce opposition of a coalition of unions representing public sector workers. Since then, legislators have refused to act to fix the inequitable system they created, at a huge cost to our members and the communities they support.
During this legislative session, the General Assembly will be holding hearings in Springfield about the future of these “Tier 2” pensions. We must let legislators know how important it is that they fix this unfair system. By taking this action, you and other members of unions representing public sector employees can make your voices heard.
This action is the first step to push legislators in Springfield to ensure that all public sector workers have a fair, secure retirement after their service, and allow us to recruit and retain the essential workers who keep Illinois running.
According to the linked page above, 50,704 email messages have been sent to legislators as of 12:55 this afternoon.
They’re also being urged to call a patch-through number, and I’m told 4,275 calls have been processed so far.
Thoughts?
- absurd - Thursday, Apr 18, 24 @ 1:11 pm:
How about creating a Tier 3 for everyone hired after 2025?
- Ducky LaMoore - Thursday, Apr 18, 24 @ 1:13 pm:
While I understand the frustration of tier 2 members, tier 1 is completely unsustainable. Maybe they’ll get some better COLAs or get 100% health coverage. But they’ll never get tier 1.
- Cool Papa Bell - Thursday, Apr 18, 24 @ 1:15 pm:
=tier 1 is completely unsustainable=
It was a series of choices to make Tier 1 unsustainable.
- Ducky LaMoore - Thursday, Apr 18, 24 @ 1:20 pm:
Not just choices, but circumstances as well. My friend is Tier 1. He will be retiring under rule of 85 at age 52. A full pension at age 52. He is healthy, so I would estimate his odds of being a pensioner longer than being an employee to be quite good.
- H-W - Thursday, Apr 18, 24 @ 1:22 pm:
I am a Tier 1 employee, and remember the creation of Tier 2. But I must confess my naivety regarding retirement plans.
If Tier 2 is as bad as it seems (and I have heard enough complaints to believe it is), why are not state employees not allowed to opt out of the state retirement system, and pay directly into the social security system for their retirement, along with the choice of paying into and IRA with a match? I am of the opinion that for some workers, such a solution would be better.
Or am I just confused, and even more naive than I realize?
- 47th Ward - Thursday, Apr 18, 24 @ 1:23 pm:
If the state considers a tier 3, they should bite the bullet and end the pensions. Pay the higher cost to put their employees into social security and get out of the pension business entirely.
And then good luck finding talented people who want to work long-term for the state.
Tier 2 seems like a slow motion train wreck.
- Pot calling kettle - Thursday, Apr 18, 24 @ 1:32 pm:
==tier 1 is completely unsustainable==
Tier 2 is even less sustainable because it doesn’t meet the social security safe harbor. If the feds send a bill, it will blow a giant hole in the budget
- Lincoln Lad - Thursday, Apr 18, 24 @ 1:32 pm:
No one is forced to work under Tier 2… they don’t have to work for the State. Something had to be done… let’s not restart the cycle of unsustainable promises.
- Rich Miller - Thursday, Apr 18, 24 @ 1:38 pm:
===because it doesn’t meet the social security safe harbor===
That’s a very broad statement which doesn’t correlate with reality.
- Grimlock - Thursday, Apr 18, 24 @ 1:54 pm:
Tweak Tier 2, but don’t go back to Tier 1. Tier 1 in SURS is “30 and out.” That makes sense for university faculty who spent years in grad school before working. But the majority of people in SURS are not university faculty. They are staff (no degree, some college, or maybe a bachelor’s) and community college faculty (most only with a master’s) so large numbers can retire at the age of 50 to 55 with full pensions. Many then work elsewhere, or at the same school part-time to pad those pensions they are collecting. That system needed to be changed.
- Cornerfield - Thursday, Apr 18, 24 @ 1:59 pm:
==tier 1 is completely unsustainable==
It would’ve been (is?) sustainable like any retirement system as long as you actually pay in what is required.
What definitely isn’t sustainable is not being able to retain new hires because of tier 2. For example, at IDOT our technical staff is like a ghost town compared to a decade ago even after the Blago and Ruiner regimes. Nowadays new engineers, and even techs, get a couple of years under their belt and then leave for the consultant world.
- Numbers - Thursday, Apr 18, 24 @ 2:02 pm:
With the State making its statutory payment under current law, the unfunded liability is not projected to decrease until FY2028. At the very least, the State should not increase benefits (except for a limited Tier 2 social security fix which isn’t that expensive), until the State’s payments start reducing the unfunded liability.
The State alternatively could change the statutory contribution to what the actuaries deem sufficient which is an extra $5 billion a year.
And there should not be any benefit increase without a full actuarially study by the system’s actuary.
- George - Thursday, Apr 18, 24 @ 2:03 pm:
“why are not state employees not allowed to opt out of the state retirement system, and pay directly into the social security system for their retirement, along with the choice of paying into and IRA with match?”
Because the tier 2 employees need to be paying into the system in order to fund tier 1.
- Flyin'Elvis'-Utah Chapter - Thursday, Apr 18, 24 @ 2:04 pm:
For those “Tier 1 is unsustainable arguments”
The state of Illinois never had problems filling vacancies in prisons and mental health facilities under Tier 1. There was a line that started around the corner.
Tier 2, they have to hold job fairs to get applicants at Choate.
…and how is that working out?
If you think you’re going to get professionals to do 30+ years in those working environments only to retire with a pension that will make you lower middle class, you’re either a fool or have never stepped foot in either.
If you think
- Downstate - Thursday, Apr 18, 24 @ 2:05 pm:
“Show your work”.
Might they pencil this out to show how this works on a fiscal basis?
- Juice - Thursday, Apr 18, 24 @ 2:09 pm:
47th Ward, most state employees are already in Social Security.
It’s the university employees and teachers that are not (in terms of the systems that the State is responsible for making the employer contributions for.)
That is a longer way of saying that any push to address future safe harbor concerns (and I think making tweaks to the pensionable salary cap would cover it) ought to include a discussion of the actual employers picking up that liability. Especially since the safe harbor issues are going to impact those workers earning more than the cap and not lower paid teachers/university employees.
- Jocko - Thursday, Apr 18, 24 @ 2:13 pm:
==He will be retiring under rule of 85 at age 52.==
That means he was a SERS employee who fell under the category of a high-risk job for 25 years. Good for him (or her).
- Demoralized - Thursday, Apr 18, 24 @ 2:16 pm:
==He will be retiring under rule of 85 at age 52. A full pension at age 52. ==
First of all, so what. Second of all, I’m not sure what you mean by “full pension” but a full pension would be 75% of salary. Do you know what percent they will be getting.
I know I plan on retiring when I meet the rule of 85 when I turn 56. I’ll be at 50% then.
And again, I really don’t care whether you think that age is somehow wrong to retire at. None of your business.
- nunya - Thursday, Apr 18, 24 @ 2:20 pm:
=Jocko=
Or he was 17 at the time of hiring.
- RNUG - Thursday, Apr 18, 24 @ 2:21 pm:
- H-W -
Most non-teacher Tier 2 employees pay into both Social Security and the applicable pension system.
To summarize all I wrote many years ago, Tier 2 employees have to work longer to get pension benefits and, compared to Tier 1, they are significantly short changed by the inflation adjustment formula under Tier 2.
Part of the problem of Tier 2 is the systems, mostly teachers, that don’t pay into SS. Under the Federal Safe Harbor rules, Tier 2 must pay at least as well as SS would have. It’s likely that Tier 2 won’t at some point in the future, hence the need to ‘fix’ it at some point.
Note: the above is a 20,000 foot explanation. There are lots of nuances to it.
- RNUG - Thursday, Apr 18, 24 @ 2:26 pm:
== tier 1 is completely unsustainable. ==
Tier 1 was sustainable HAD the appropriate contributions been made by the State. Less than actuarial value contributions plus pension payment holidays made sure it would fail.
From a historical perspective, Tier 1 actually saved the State some money in total because it shifted part of the (previous system) pension burden to the Federal government. But it came at the expense of the State having to pay their share of Social Security which impact cash flow, because the State was used to shorting the pension systems. So it actually became somewhat harder for the State to pay into their pension systems.
- Grimlock - Thursday, Apr 18, 24 @ 2:34 pm:
Demoralized,
75% of your salary doesn’t sound bad at all when you consider that no state taxes will be paid on that income, no deductions for the retirement system, and the person will now get free healthcare that will also no longer be deducted.
- RNUG - Thursday, Apr 18, 24 @ 2:37 pm:
== retiring under rule of 85 at age 52. A full pension at age 52. ==
There is a specific formula for pensions under SERS. Unless he was in a life safety position (or a Legislator), most State employees have to work 44 years and 9 months to get a ‘full’ pension (defined as 70% of final average compensation).
Under Rule of 85 (age plus service = 85), you can retire with varying amounts of service years. If you start at age 18, at age 52 you have 32 years of service. 52 + 32 = 84 so he would need an extra half year. Assuming 32.5 years of service, retiring then results in a pension of 54.275% of FAC … quite a ways from a full pension of 75%.
- RNUG - Thursday, Apr 18, 24 @ 2:39 pm:
== why are not state employees not allowed to opt out of the state retirement system, and pay directly into the social security system for their retirement, ==
Most non-teacher State employees pay into both Social Security and the applicable State pension system.
- H-W - Thursday, Apr 18, 24 @ 2:42 pm:
Thanks, RNUG. That helps.
- Southern Dude - Thursday, Apr 18, 24 @ 2:53 pm:
I retired Tier One. It seems the biggest complaint I heard when I was working was the COLA. I really don’t think Tier One will be reinstated - perhaps a compromise could be a lower COLA (compared to Tier One) in exchange for lowering the retirement age for Tier 2.
- Ducky LaMoore - Thursday, Apr 18, 24 @ 3:00 pm:
Thank you, RNUG. Not a full pension. But still fully vested 52% of final pay, health benefits, and a guaranteed 3% COLA. And it’s a wonderful thing for him. I wish I had been forward thinking enough to get a tier 1 state job back in the day. And yes, if all the payments had been made, the system would be in much better shape, perhaps sustainable. But how much cash is everyone okay with going into the pension system? That’s the problem.
- Bigtwich - Thursday, Apr 18, 24 @ 3:30 pm:
== tier 1 is completely unsustainable ==
The tier 1 municipal retirement system was usually funded at around 90%. It did have two major differences from other pension systems. First, the COLA stayed at 3% of the original retirement amount. Second, if a municipality did not make their payment the IMRF could intercept state payments to the municipality.
- Nothing - Thursday, Apr 18, 24 @ 3:31 pm:
“Second, if a municipality did not make their payment the IMRF could intercept state payments to the municipality.” Until the inevitable, unavoidable bankruptcy that is going to happen sooner than later for many of them. And yes, they will be forced to allow bankruptcy.
- Diver Down - Thursday, Apr 18, 24 @ 3:58 pm:
This is the habitual plan. It is less lucrative than Tier 1 but more lucrative than Tier II:
https://ieanea.org/undo-tier-two/
- Diver Down - Thursday, Apr 18, 24 @ 3:59 pm:
*Habitual=actual
- Demoralized - Thursday, Apr 18, 24 @ 4:26 pm:
==75% of your salary doesn’t sound bad at all==
I didn’t say it was bad. I was only stating what “full retirement” pay would be.
- JS Mill - Thursday, Apr 18, 24 @ 5:15 pm:
First, everything RNUG said is spot on. Thanks RNUG for clarifying so well what few private sector folks understand.
=no state taxes will be paid on that income, no deductions for the retirement system, and the person will now get free healthcare that will also no longer be deducted.=
Everyone gets a pass on state income tax when it comes to qualifying retirement income. And everyone still pays federal income tax which is much larger. The state discount is 5% not nothing but not a free pass either.
And, most retirees in the state pension systems do not get “free” insurance. Educators definitely do not. We pay TRIP and THIS throughout our career and then pay lower premiums until medicare kicks in. Not free.
- Grimlock - Thursday, Apr 18, 24 @ 6:11 pm:
Public university employees get the free healthcare.
- maybe - Thursday, Apr 18, 24 @ 6:39 pm:
State Employee Retirement offers “free” healthcare to, but only after 20 years of service.
- Facts are stubborn things - Thursday, Apr 18, 24 @ 8:13 pm:
=State Employee Retirement offers “free” healthcare to, but only after 20 years of service.=
Health care is not free. It is premium free.