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* Greg Hinz has the best details on the pension reform bill of anyone in the mainstream media…
Under the proposed new formula, the COLA only would apply to one’s years on the government job, times $1,000. That means, for instance, that a 25-year government veteran would get a 3 percent annual COLA only on the first $25,000 of their pension, even if the total pension was $50,000. That employee would get no COLA on that second 25-grand.
That $1,000 figure would increase with inflation. But insiders say there would still be huge savings because of the portion of one’s pension that would not get a COLA. Those with particularly high pensions would be really zapped; lower-salaried workers, less so.
Subscribers have known about this for quite a while now.
* This isn’t new, either, but won’t please many…
In addition, all COLA would be eliminated for one to five years for current state workers (not retirees), depending on their age.
* More…
Another savings would come from raising the retirement age. Those workers who are at least 45 years old would see no change. But younger workers would gradually have to work up to five years longer to start receiving their pension. (In some plans, you can retire as young as 58.)
In exchange, workers would contribute 1 percentage point less of their salary toward their retirement than what they pay now.
Discuss.
posted by Rich Miller
Wednesday, Nov 27, 13 @ 3:48 pm
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Previous Post: SUBSCRIBERS ONLY - Clearing up some contradictions
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Much less aggressive than I thought was needed. Not surprised this is where they had to come out.
Comment by walkinfool Wednesday, Nov 27, 13 @ 3:54 pm
Supreme Court here we come!
Comment by DPGumby Wednesday, Nov 27, 13 @ 4:00 pm
Rich how do private sector unions feel about this potential pension reform bill? I’m not to familiar with the private/public sector union relationship in Illinois, but I can’t imagine private sector unions having such generous COLA
Comment by anonymous Wednesday, Nov 27, 13 @ 4:04 pm
Hmmm. Where is the shall not be diminished part?
Comment by Wordslinger Wednesday, Nov 27, 13 @ 4:14 pm
Probably not the best news for Rauner if this issue gets taken off the table.
Comment by Downstate Wednesday, Nov 27, 13 @ 4:17 pm
We have heard arguments concerning the totals, the retirement age, COLA calculations and the like.
Now if someone can just provide a cogent argument as to how these changes do not diminish benefits…
Comment by Formerly Known As... Wednesday, Nov 27, 13 @ 4:25 pm
Wordslinger,
No need to worry about silly constitutional guarantees when Madigan and Burke appoint the judges.
Comment by Fed up Wednesday, Nov 27, 13 @ 4:26 pm
Dear Unions:
Thank you for all your support over the years. Thank you for all the hours you spent walking neighborhoods and making calls. Thank you for all the money you donated. Thank you for helping me secure a veto-proof majority in both chambers.
My allies and I appreciate it. And this is how I will repay you.
Best,
Michael J. Madigan
Comment by Formerly Known As... Wednesday, Nov 27, 13 @ 4:32 pm
I suppose I should say it could be worse. And yes, it could. But why is it that career professionals that made it to the upper ranks of their agencies should be so penalized? The pension I earned is not stinking welfare.
Comment by kimocat Wednesday, Nov 27, 13 @ 4:43 pm
—
Dear Unions:
Thank you for all your support over the years. Thank you for all the hours you spent walking neighborhoods and making calls. Thank you for all the money you donated. Thank you for helping me secure a veto-proof majority in both chambers.
My allies and I appreciate it. And this is how I will repay you.
Best,
Michael J. Madigan
—
P.S. where else you going to go? The Republicans? HAHAHAHAHA
Comment by RonOglesby Wednesday, Nov 27, 13 @ 5:12 pm
I would have planned a whole lot differently if I had known the state could take away what was promised to me. This is very unfair to those of us who are already retired and planned our living based on our pension promises. I will fight this and will not vote for anyone who votes for it in the legislature.
Comment by CSR Wednesday, Nov 27, 13 @ 5:59 pm
The 1% contribution reduction for employees oould be argued to be “consideration” but what do current retirees like myself get?
Comment by Anonymous Wednesday, Nov 27, 13 @ 6:41 pm
Private sector workers get Social Security plus whatever their pension plan is. Public workers in the pension system do not. COLA is all there is between them and poverty as they get older. Who has what is not the issue.
Comment by Llilly Wednesday, Nov 27, 13 @ 6:42 pm
I agree that it could be worse. Interested to see when effective date would be. Believe the Chicago Park District date was January 2015. Doubt this bill will be effective immediately even if they get 60% in each chamber because would take too long and too complicated to implement. Could be June 1, 2014 if simple majority. July, 2014, the fiscal year, makes the most sense. Get out now!
Comment by No Raise Wednesday, Nov 27, 13 @ 7:25 pm
A professional and by no means at the upper ranks of an agency. Took about 30 seconds with an online interest calculator to figure out that the cap on pensionable COLA alone will steal more than $100,000 from me. All of you who characterize this as minimal need a better understanding of math.
Comment by wtf Wednesday, Nov 27, 13 @ 8:00 pm
Anybody out there who plays a lawyer in their spare time know what affect this has on the level income option ? while the paperwork doesn’t specifically mention the 3% Cola, the CMS brochure uses it to show the amount of money you will have at 62 or 65. Seems its either a violation of the pension clause or fraud.
This will irritate non state workers but your comment about people retiring as early as 58… I left at 54 (SERS) …sorry…..it wont happen again…. I promise
Comment by Anotherretiree Wednesday, Nov 27, 13 @ 8:00 pm
This is a serious proposal. It even can pass constitutional muster because they aren’t cutting anyone’s guaranteed benefits. The big question is : is it enough to make the pension plans solvent in the short and long run????? Only time will tell because no one knows exactly what the S&P 500 and the bond market is going to look like 10 years from now. So, this might only be a temporary fix. But, again, this is serious. What’s not fair is for government workers to be in pension funds that are below 80% funded. No one in the S&P 500 can get away with that. I strongly urge all readers to check this chart on where Illinois is on pension funding vs. other states.
http://nalert.blogspot.com/2013/11/most-underfunded-pension-plans-by-states.html
Comment by Steve Wednesday, Nov 27, 13 @ 8:32 pm
It will be interesting to hear Cullerton explain to his caucus why what was unconstitutional in May is now ok.And if any Senators who voted against SB1 vote for this Thanksgiving turkey, how will they explain their flip-flop?
Comment by Truthteller Wednesday, Nov 27, 13 @ 9:26 pm