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* WGEM…
Teachers, police officers, firefighters and other public employees told Illinois state lawmakers Friday the state’s current pension system is not fair.
They testified during a House Personnel and Pensions Committee hearing in Chicago about how to fix the current system, which sees newer employees getting smaller benefits.
“The disparity between Tier 1 and Tier 2 pension benefits is stark and unfair. I work alongside colleagues performing the same duties but with significantly better retirement benefits,” said Eric Hall a firefighter and paramedic in Bloomington. […]
Though there’s no quick fix, lawmakers have filed bills in both the state House and Senate to address Tier 2 problems. If passed, it would bring the final average salary pension calculation in line with tier one, align retirement ages between the tiers, implement an across the board 3% simple interest cost-of-living adjustment for all Tier 2 members and close and adjust the pension salary cap to match the social security wage base. That will address the so called “safe harbor” problem and ensure their pensions equal what they’d make if they received social security benefits.
* HB5909‘s synopsis…
Amends the Illinois Pension Code. Makes changes to Tier 2 benefits, including changing the amount of the automatic annual increase to 3% of the originally granted retirement annuity or 3% of the retirement annuity then being paid for the General Assembly and Judges Articles, changing the limit on the amount of salary for annuity purposes to the Social Security wage base, changing the calculation of final average salary to the Tier 1 calculation for persons who are active members on or after January 1, 2025, and changing the retirement age. Establishes an accelerated pension benefit payment option for the General Assembly, Chicago Teachers, and Judges Articles of the Code. Provides that, with regard to persons subject to the Tier 2 provisions, a security employee of the Department of Human Services, a security employee of the Department of Corrections or the Department of Juvenile Justice, an investigator for the Department of the Lottery, or a State highway worker is entitled to an annuity calculated under the alternative retirement annuity provisions of the State Employee Article of the Code. Authorizes the conversion of service to eligible creditable service. Provides that the Retirement Systems Reciprocal Act (Article 20 of the Code) is adopted and made a part of the Downstate Police, Downstate Firefighter, Chicago Police, and Chicago Firefighter Articles. Authorizes SLEP status under the Illinois Municipal Retirement Fund for a person who is a county correctional officer or probation officer and for a person who participates in IMRF and qualifies as a firefighter under the Public Safety Employee Benefits Act. In the Downstate Firefighter Article, includes a de facto firefighter in the definition of “firefighter”. Defines “de facto firefighter”. Provides that the monthly pension of a firefighter who is receiving a disability pension shall be increased at the rate of 3% of the original monthly pension. Makes changes to the minimum retirement annuity payable to a firefighter with 20 or more years of creditable service, the minimum disability pension, and the minimum surviving spouse’s pension. Makes other changes. Amends the State Mandates Act to require implementation without reimbursement by the State. Effective immediately.
* The governor was asked about the bill Thursday…
Reporter: Tomorrow there’s a hearing for HB5909 and that’s focused on Tier 2 fixes, it’s not solely on that but that’s one of the things. Can you comment on that legislation and do you support it? Do you think it’s going to be the fix that’s needed to bring the system into social security compliance?
Governor Pritzker: Let me say this. I think you’ve heard me talk about the fact that we have to meet, what’s referred often to as a Social Security equivalence, in order for it to sort of meet the standards for the state not having a larger liability. We are not exact-no one is exactly sure what that amount is.
The estimate, I’ve seen several estimates, let’s just call it $3 to $6 billion total over a 20 plus year period. So that is something that has to be done. I know there are people who would like to add other things on to a bill like that. And I think some of those things are included in this bill that you’re referring to.
But, you know, I have several things on my mind when I think about this. I think most especially, maintaining our fiscal responsibility in the state of Illinois to, you know, we already have a significant amount of pension liability and payments that we make, but we’ve been managing those properly.
And you heard me say, I think yesterday, here that our pension funded ratio has been improving every year or total over the last six years since I took office. And I’m proud of that, and it’s something that in yours to the benefit of everyone in this room and everyone at home that is a resident of the state of Illinois. So that is something I don’t want to let go.
Reporter: What about this legislation?
Pritzker: Yeah, I think that’s why you have hearings. We want to hear what people have to say about it.
posted by Isabel Miller
Monday, Dec 16, 24 @ 9:27 am
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Said it when it passed.
If anyone thinks an individual with and education and skillset is going to work 30 plus years in a prison/mental health facility for a pension that will make them lower middle class, they’re delusional.
To paraphrase C. Montogomery Burns-Oh, thank you Pat Quinn.
Comment by Flyin'Elvis'-Utah Chapter Monday, Dec 16, 24 @ 10:01 am
There are advantages to Tier II. Veterans are able to buy four years of military service rather than two. Widows receive 75% of the spouses annuity rather than 50%. I believe there was one more sweetener but I don’t recall. The differences are not merely in the annual increase calculation.
Comment by Bill in Joliet Monday, Dec 16, 24 @ 10:01 am
=told Illinois state lawmakers Friday the state’s current pension system is not fair.=
It is perfectly “fair”. It was not a secret, anyone who accepted a tier 2 position knew that before accepting the job. Better said is that it isn’t very good. But it is fair.
Comment by JS Mill Monday, Dec 16, 24 @ 10:06 am
The Tier 2 pensions are part of the reason why the state is in a better financial picture. Just because we are in a better position now doesn’t mean we need to start spending like drunken sailors on pensions again.
Comment by James Monday, Dec 16, 24 @ 10:13 am
I have two relatives teaching in the Tier 2 system. Like most young people they didn’t give it a thought when they were first employed. But 10 years in they realize that it’s a really lousy deal.
Comment by Friendly Bob Adams Monday, Dec 16, 24 @ 10:15 am
The new retirement reality is that massive numbers of folks hitting 65 in the next few decades will face the reality of being woefully unprepared to fund their retirement years. In this new reality – even supposedly bad tier 2 plans look very appealing
• Only 7% of Gen X and 23% of Boomers+ said they had more than 10x their annual income saved up, the minimum that experts recommend having available for retirement.
• The majority of Gen X said they have three times their annual income (or less) saved up for retirement, according to a recent study.
• More than half of Gen X and Boomers don’t think they’re financially prepared for retirement.
https://www.investopedia.com/gen-x-is-getting-closer-to-retirement-but-not-its-retirement-savings-goals-8735907
Comment by Donnie Elgin Monday, Dec 16, 24 @ 10:22 am
If I am reading that correctly, members of the G.A. and judges will get their 3% AAI compounded, while everyone else will not.
Comment by Big Dipper Monday, Dec 16, 24 @ 10:30 am
Can’t wait to see the Pension Impact Note on this …
Comment by Anyone Remember Monday, Dec 16, 24 @ 10:38 am
I don’t think any reasonable person thinks Tier 2 employees don’t deserve Tier 1 benefits. The problem is paying for it.
Comment by TNR Monday, Dec 16, 24 @ 10:48 am
I’m 10+ years into state employment as Tier 2 now. I went in on the assumption that I would 100% definitely leave state employment for a higher paying job specifically to pad my retirement savings at some point. But I don’t have kids or anything, so uprooting my life to chase a buck later in life will be an easier choice for me than many others.
The sad reality is that lots of jobs in state government are underpaid compared to the private sector. You rely on the good will of employees to keep them working long term.
Comment by Homebody Monday, Dec 16, 24 @ 10:49 am
=start spending like drunken sailors on pensions again.=
Illinois never did “spend like drunken sailors” on pensions. That “myth” was dispelled in 2004. Illinois legislatures failed to fund the pensions they approved for 90 years. Where the “drunken sailor” spending happened was on everything else while not raiding the revenue needed to cover the costs. Then, politicians scapegoated pensions for their fiscal misdeeds.
Comment by JS Mill Monday, Dec 16, 24 @ 10:50 am
==I work alongside colleagues performing the same duties but with significantly better retirement benefits==
That was true day one when you took the job. If it was a problem, you shouldn’t have accepted the position.
Many other states have multi-tiered pension systems. Most created those tiers many years prior to Illinois, so the gap between tiers isn’t as great. But there is a gap. Older workers got a better deal. Such is life.
Comment by City Zen Monday, Dec 16, 24 @ 10:52 am
== I went in on the assumption that I would 100% definitely leave state employment for a higher paying job specifically to pad my retirement savings at some point==
If you leave now, your pension will be frozen in time, perhaps decades, losing value to inflation. You might be better off cashing out and opening an IRA.
Comment by City Zen Monday, Dec 16, 24 @ 11:01 am
==Yeah, I think that’s why you have hearings. We want to hear what people have to say about it.==
Brave, JB.
Comment by SWSider Monday, Dec 16, 24 @ 11:02 am
=I work alongside colleagues performing the same duties but with significantly better retirement benefits=
Over time that problem will be eliminated as Tier 1 folks, leave employment, or retire.
Comment by Donnie Elgin Monday, Dec 16, 24 @ 11:06 am
Today’s state employee is making much more than the employee of a dozen years ago. I don’t begrudge them that, but those lower salaries are also reflected in pension calculations.
Comment by Lincoln Lad Monday, Dec 16, 24 @ 11:08 am
== If you leave now, ==
Once you are 10 years in, the decision process gets more complicated. For the SERS employee, at that point you are vested in the retiree health care program. Admittedly it only pays for just over half at that point, but just having that portion and access to it is a valuable asset. Once you reach the 20 year mark, you have health insurance for the rest of your life (once you are retired collecting a pension check) … and it’s a better health insurance than anything else offered … and the future actual dollar value is hard to quantify.
Comment by RNUG Monday, Dec 16, 24 @ 11:33 am
Bill says tier2 is great– for your spouse if you’re dead. Best marketing slogan ever.
Comment by yepp Monday, Dec 16, 24 @ 11:36 am
“more than 10x their annual income saved up, the minimum that experts recommend having available for retirement.”
The “experts” may say that, but I’d like to know when, at any point in our nation’s history any generation had that amount in savings.
Of course, many didn’t have to because of these things we used to call pensions.
Comment by Flyin'Elvis'-Utah Chapter Monday, Dec 16, 24 @ 11:53 am
Sounds reasonable in light of a $3 billion budget deficit.
Comment by Boone's is Back Monday, Dec 16, 24 @ 1:08 pm
The Guv being very circumspect in his comments. Make of it what you will.
Comment by Mason County Monday, Dec 16, 24 @ 1:21 pm
Im sorry, but most fireman and cop pensions on bigger cities,such as the Bloomington case will be far greater than the max s s payout even under tier 2. I think they just,want more $$$.
Comment by Illinois Must win Monday, Dec 16, 24 @ 1:35 pm
“There are advantages to Tier II. Veterans are able to buy four years of military service rather than two.”
This statement is misleading. Purchasing 4 years of military credit is not exclusive to Tier 2. I am in Tier 1, and I purchased 4 years of military service credit.
Comment by Steve Polite Monday, Dec 16, 24 @ 1:50 pm
Teachers, police officers, firefighters and other public employees told Illinois state lawmakers Friday the state’s current pension system is not fair.
If only the states taxpayers were represented in a meaningful way beyond the GA Super Majorities.
Comment by It's always Sunny in Illinois Monday, Dec 16, 24 @ 2:26 pm
Speaking as a Tier 1 retiree and having been employed by IMRF and SURS, Tier 2, first and foremost, must be amended to come into compliance with the Social Security requirements. Then the Tier 2 retirement age should be lowered by a couple of years and vesting should occur after 8 years, not 10. COLAs should be simple interest, not compounded. At that point, I believe we would have a viable Tier 2.
Comment by Retired SURS Employee Monday, Dec 16, 24 @ 2:32 pm
==If only the states taxpayers were represented in a meaningful way==
The state’s taxpayers are represented by the people they elected. Just because you don’t get what you want doesn’t mean you aren’t represented. I would also remind you that those that state employees are also taxpayers entitled to representation.
Comment by Demoralized Monday, Dec 16, 24 @ 2:33 pm
@Retired, can you elaborate more on this please?
“first and foremost, must be amended to come into compliance with the Social Security requirements.”
Comment by Lurker Monday, Dec 16, 24 @ 2:41 pm
Tier 2 is also a significant contributing factor to the teacher’s shortage. Who believes that teaching until 67 years of age is good for anyone?
Comment by Retired School Board Member Monday, Dec 16, 24 @ 2:46 pm
=Then the Tier 2 retirement age should be lowered …vesting should occur after 8 years… At that point, I believe we would have a viable Tier 2=
And you eliminate almost all of the cost savings. Tier 2 was not a conspiracy - but a tool to get the pensions viable without being onerous to the taxpayers. The big driver is these requirements
from the Illinois Pension Code law
“Under Illinois pension law, each pension system is required to reach 90 percent funding by 2045″
Comment by Donnie Elgin Monday, Dec 16, 24 @ 2:48 pm
@Lurker Unfortunately, I do not have access to the computations needed in order to avoid Social Security non-compliance. I’m sure that COGFA has run the numbers. However, what I am proposing is that Social Security compliance is the most important change needed for Tier 2 and everyone acknowledges that fact.
Comment by Retired SURS Employee Monday, Dec 16, 24 @ 2:49 pm
===I am in Tier 1, and I purchased 4 years of military service credit.===
When? Know someone 25 years ago who wanted to purchase 4 years and was told 2 was the maximum. IF 4 years had been purchaseable, person would have retired 2 years earlier.
Comment by Anyone Remember Monday, Dec 16, 24 @ 3:04 pm
==Tier 2 is also a significant contributing factor to the teacher’s shortage.==
There is zero evidence supporting this. And if it was true (it’s not) but teaching is your lifelong dream, there are 49 other non-tier 2 states to ply your wares.
Don’t let a pension tier choose your destiny.
Comment by City Zen Monday, Dec 16, 24 @ 3:35 pm
===our pension funded ratio has been improving every year===
Has it?
Comment by thechampaignlife Monday, Dec 16, 24 @ 4:23 pm
=And you eliminate almost all of the cost savings.=
Changing the time it takes to be vested would have almost no effect on cost savings. Moving to a compounding COLA would, but there are no numbers to support the statement that it would eliminate “almost all” savings.
===Tier 2 is also a significant contributing factor to the teacher’s shortage.==
There is zero evidence supporting this.=
Zero is a bit of a stretch but it is definitely not the most significant factor. Few if any new or potential teachers understand much in the way of pension details.
I would recommend lowering the retirement age to 62. Based on numbers I saw back in 2012, this would be financially doable (iirc- Daniel Biss had the numbers back then.)
Comment by JS Mill Monday, Dec 16, 24 @ 4:57 pm
Anyone remember. A law was passed in 2006 that allowed purchase of up to 4 years of military service. I know because t that’s when I bought mine.
Comment by Justdoingtime Monday, Dec 16, 24 @ 7:48 pm
==I would recommend lowering the retirement age to 62.==
Seems like Tier 2 participants value certain pension enhancements. In the spirit of the WRA, we should collectively bargain for them. How much is knocking off 5 years off the retirement age worth to Tier 2 particpants? 2 percent point increase in the employee contribution rate perhaps?
It’s easy to say lower the age to 62 now, but what will 62 mean in 40 years? It’s a generational commitment. We shouldn’t give it away because we can never take it back, especially not for free. Safe harbor is the basement. Anything above that has a price.
Comment by City Zen Monday, Dec 16, 24 @ 8:11 pm
Why doesn’t anyone ever talk about how tier 2 was passed very quickly and not read three times. I hope the judges that filed the lawsuit on how tier 2 was passed will get it turned over. The penalties are an absolute joke to leave at 62. I hope HB5909 does come true for all stuck in tier 2. I would be happy with that. Good luck to all
Comment by City Employee Monday, Dec 16, 24 @ 9:07 pm
Trier 2 has to be fixed because of the safe harbor problem . But als with first responders we need to make it attractive to be in this occupation again . Too much risk for little reward . Management at the state and local government got us in the problem of underfunded pensions . Other states have managed their pension payments and did not take holidays or backload payments.
Comment by Tinman Tuesday, Dec 17, 24 @ 9:12 am
As T2 I just don’t like paying the same as T1 knowing I’m not going to get what they do. The country as a whole throws an enormous fit every time someone mentions lowing the amount you get from SS while continuing to take the same amount. Why should I treat this any diffrent?
Comment by Concerned T2 state worker Tuesday, Dec 17, 24 @ 10:52 am