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* From Gov. Pat Quinn’s press office…
GOVERNOR’S PUBLIC SCHEDULE
**Friday, April 20, 2012**CHICAGO – Governor Pat Quinn will announce his plan to fix Illinois’ pension system.
WHEN: 12 p.m.
WHERE: James R. Thompson Center
15th Floor Blue Room
100 West Randolph
Chicago, 60601ADDITIONAL: This event will be streamed live on www.Illinois.gov.
* The AP has a preview…
But legislators on a committee assigned to suggest fixes to the severely underfunded retirement program said they were told Quinn wants workers to put more of their paychecks toward their nest eggs, though they wouldn’t provide specifics. The plan also will call for an adjustment to cost-of-living increases for retirees. […]
Quinn, whose plan will also include a 30-year schedule for catching up on the funding backlog, according to the legislators, will forge forward even though the committee advised the governor’s office they had not reached agreement on a complete package of reforms. They intend to keep working. […]
Sen. Bill Brady, a Republican committee member from Bloomington, said the plan will include the “best mix” of ideas, including an adjusted COLA that “we can afford” but which “maintains the value of the pensions.”
posted by Rich Miller
Friday, Apr 20, 12 @ 10:08 am
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Will be intereesting to see what Quinn thinks employee contributions should be. These vary widely from agency to agency. Some pay as little as 4% others pay close to 10%. Getting everyone up around 9-10% should make a difference
Comment by Fed up Friday, Apr 20, 12 @ 10:19 am
Cognitive dissonance or election posturing?
Comment by Professor Friday, Apr 20, 12 @ 10:22 am
Based on what’s been in the press so far, the “findings,” should they lead to any proposal or legislation, no reform is going to happen. This is essentially a hodgepodge of all the ideas thrown around in the last year, with little of it being constitutional, and no indication of fixing the funding problem.
I’m guessing this is going to just be election posturing. “Look, we GAVE the GA these suggestions, and they couldn’t pass a bill with it. It’s not MY fault…”
Comment by Burnham Wannabe Friday, Apr 20, 12 @ 10:25 am
some also contribute to social security - that is one of the reasons for the variance in pension contribution rates - eg teachers don’t contribute to social security and their rate is higher - but so also is their pension
Comment by sadie Friday, Apr 20, 12 @ 10:27 am
How about a choice that benefits the employee in the near term and the state in the long term. Give employees the option of leaving the state retirement system. Each pension has a current cash value. The state will pay the employee something like 4x that value. Say someone has a $15,000 value in their pension, the state would pay $60,000 to that employee. In addition, their paycheck would increase by their pension payment. In essence it’s a lump sum and a raise. The state could have options to roll the amounts into deferred comp or some other option. I don’t know all the penalties for this type of transaction but maybe it could be an immediate termination and reinstatement. The state could sweeten it more by saying upon reinstatement you can join the tier 2 pension system or something.
Comment by Choice? Friday, Apr 20, 12 @ 10:32 am
Fed up….I think the difference in contribution is dictated by they system. People who pay 4% are also paying the 7% Fica tax and will get Social Security when they retire. The folks who pay around 10% get a larger pension but no social security because the state is theoretically investing the employer share of fica into the pension system and paying rather than SS.
Comment by Raising Kane Friday, Apr 20, 12 @ 10:38 am
I pay 8% towards SURS right now. I literally can’t afford to pay more. I have to pay some medical expenses out of pocket because not all doctors will bill state insurance any more; it’s up to me to seek reimbursement. I’m still waiting on repayments from over a year ago.
I can’t afford to work for the State of Illinois if they ask me to contribute more.
Comment by Stuff happens Friday, Apr 20, 12 @ 10:45 am
I think Burnham Wannabe has it about right.
Go ahead and pass something. See ya in court.
Comment by PublicServant Friday, Apr 20, 12 @ 10:51 am
IMHO, all employees should be contributing about 50% of the normal cost of the pensions. Today many are contributing less than that. There may be some who are already contributing that much or more: certainly many of the tier 2 employees do.
Comment by steve schnorf Friday, Apr 20, 12 @ 11:22 am
Is there a reason, other than tribalism that one employee should have more or less of a benefit than another in the public sector? It would seem that some sort of system wide harmonization would benefit all. Make a COLA conform to some sort of index, not just because…….
It goes without saying that the tweaks that allow cronies to sweeten their pension by gaming the system should be eliminated.
Comment by Plutocrat03 Friday, Apr 20, 12 @ 11:45 am
Steve
How would you figure that 50% cost when so much o the pension depends on investment returns over 30+ years of employment
Comment by Fed up Friday, Apr 20, 12 @ 11:46 am
Regarding COLAs, I’m very interested in what Sen Brady has to say.
My guess is most retirees of the past 10-15 years are receiving pension payments that produce purchasing power well in excess of their original pension. That’s primarily because we have had very low inflation for quite some time, and the COLA has been in excess of the CPI for quite a few years now. Without seeing the numbers from the systems I can’t be sure but I believe most retirees of the past 10-15 years could take a 2 or 3 year COLA holiday and still end up with 100% or more of their original pension payment’s purchasing power.
It’s pretty easy to forget that it wasn’t that long ago that inflation of 3-4% a year was thought of as pretty normal, and inflation approaching double digits wasn’t unheard of (Remember Jimmy Carter). 3% COLAs helped, but didn’t cover decreased purchasing power for pensioners back then. Unless things have changed there were retirees receiving pension payments that produced purchasing power of less than 50%of their original pension.
So what to do? Logical might be to simply base COLAs on CPI, but that has the potential of producing COLAs of 5 or 6 some years in the future and the public won’t like that, and many of our elected officials won’t be able to take the heat.
Comment by steve schnorf Friday, Apr 20, 12 @ 11:49 am
Fed, I’m talking about normal cost, a proxy for the new amount needed each year if all other assumptions are true.
Comment by steve schnorf Friday, Apr 20, 12 @ 11:52 am