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* Finke has a story today about House Majority Leader Barbara Flynn Currie’s new pension bill…
A major component of the bill is to incorporate a plan put forward by Cullerton, D-Chicago, and also embraced by Republican Gov. Bruce Rauner. It would require those covered by the state-funded pension systems to make a choice: either continue to have future pay increases count toward their pensions and give up the automatic 3 percent compounded raises in their retirement benefits or keep the pension raises, but give up having future pay increases count toward retirement.
The idea is to work around the 2015 state Supreme Court ruling that lawmakers couldn’t unilaterally impose changes on pension benefits after someone signed up for them. The concept is to offer workers something in exchange. […]
Currie’s bill also would create an option for members of the pension systems to take a lump-sum buyout of their pension benefits. Various ideas for this have been floated the last two years but have never come to a vote in the House. Limitations have been part of those plans, such as not allowing people to cash in all of their state benefits and placing limits on the number of people who could participate each year.
In addition, Currie’s legislation requires that a 401(k)-style defined-contribution program be set up for some people in the pension systems, and it provides $215 million to help pay for Chicago teacher pensions. The bill also closes the General Assembly Retirement System to new members after a certain date.
* I asked our resident pension expert “RNUG” to take a look at the bill. He sent back a long and detailed examination. Click here to read it and then comment below.
*** UPDATE *** From House Republican Leader Jim Durkin…
“Apparently, House Democrats have come to the realization that pension reform is desperately needed in this state, bravo! So upon learning that they have filed language identical to the House Republican pension reform plan, House Bill 4027, introduced in March, we simply remind them that we are prepared to offer 26 votes, which is our pro-rata share of votes, to support a structured roll call on this issue. It is now up to the Speaker to determine whether or not he is serious about pension reform by providing the 34 votes necessary for passage or if this is just another typical end of session game,” said Durkin.
I would also refer you to our original press release: http://www.ilhousegop.org/pension_reform
posted by Rich Miller
Wednesday, May 10, 17 @ 10:28 am
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Rung, thanks for your hard work. Lots of information to digest here.
Comment by No Longer a Lurker Wednesday, May 10, 17 @ 10:33 am
It doesn’t sound like any good news for current employees.
Comment by anon2 Wednesday, May 10, 17 @ 10:37 am
RNUG, thanks for your efforts. I don’t see how this can pass. I was talking to union rep the other day and he’s shocked they haven’t offered an ERI. Get rid of higher paid workers and replace with tier 2 employees /s. We know it would decimate the union and allow him to contract out.
Comment by Anonymous Wednesday, May 10, 17 @ 10:41 am
RNUG, good work as always.
Like other pension reduction efforts, we’ll see if the S.C. will accept extortion as a consideration.
Comment by Norseman Wednesday, May 10, 17 @ 10:44 am
Thanks very much RNUG. Coercing employees to choose between options that diminish without offering the ability to keep the plan they have will be deemed unconstitutional.
Comment by kitty Wednesday, May 10, 17 @ 10:49 am
This is the part that gets me. They are NOT allowed to “reduce” the retirement benefit of a current employee. The attempt is to “offer” a “choice” between two options; however, if you are required to make a choice then you are in-fact being forced into a reduction. If there was a choice that didn’t diminish benefits then maybe I could see it being constitutional, but without an option to remain the same I don’t see how it can pass.
Comment by OpenYourEyes Wednesday, May 10, 17 @ 10:49 am
RNUG, man you are good! Thanks!
Comment by JS Mill Wednesday, May 10, 17 @ 10:52 am
As always, thanks RNUG.
Unless there’s an Option C, i.e., I’ll keep what I have, it seems there could be some Constitutional problems.
But we’ve seen this movie. Pass something, claim victory and get the pipe-hitters off your back for a while In the full knowledge that the Supremes will toss it down the road.
There was no stuttering in that last unanimous, bipartisan decision.
Comment by wordslinger Wednesday, May 10, 17 @ 10:52 am
As others have said, thank you RNUG for digging into this. Great work, as usual.
To the bill: I don’t see this passing the constitutional huddle. It will pass and get struck down, and we’ll be right back here. Focus should be either on new hires or, as another poster stated, ERIs.
What a mess.
Comment by Fixer Wednesday, May 10, 17 @ 10:52 am
I know that people are going to have to assess this on an individual basis but here’s a for instance. I’m 49 years old and I have 10 years in the system. I have run the numbers and the tipping point for me is age 60. At age 59 it’s better for me to keep the AAI, at age 60 it’s almost even money either way and at age 61 the advantage is to choose the salary.
Comment by Gruntled University Employee Wednesday, May 10, 17 @ 10:54 am
I agree with Word. Unless one of the options is keep what you have I have no idea how this is Constitutional. They should spend more time figuring out how to pay what is owed and less time trying to “outwit” the Constitution. They aren’t very good at it.
Comment by Demoralized Wednesday, May 10, 17 @ 10:56 am
No future pay raises at all for Tier 1.
Comment by Ron Wednesday, May 10, 17 @ 10:58 am
I cannot believe this would pass the diminishment test. I already have what they are asking me to choose between (raises and COLA). If you have 2 items currently and someone says you can only choose 1, you have been Diminished. RNUG, thanks for the good work and analysis.
Comment by Jump before the train wrecks Wednesday, May 10, 17 @ 11:00 am
In 5, 4, 3, 2, 1….IPI headline “Common sense pension plan put forward, but will die because of Madigan”
Comment by Dr X Wednesday, May 10, 17 @ 11:00 am
The simplest thing to do immediately is never give a pay raise to a Tier 1 employee.
Comment by Ron Wednesday, May 10, 17 @ 11:01 am
In the words of the wise sage Oswego Willy (and many others) Please don’t feed the trolls.
Comment by Gruntled University Employee Wednesday, May 10, 17 @ 11:04 am
In answer to my previous question: How can Tier 2 cuts have any chance in court? Re-read the bill language. The cuts only apply to new employees. The bill creates a new, lower Tier 3 without saying so.
Comment by Quiet Sage Wednesday, May 10, 17 @ 11:05 am
We heard you Ron, and your parrot.
Comment by ComeTogether Wednesday, May 10, 17 @ 11:07 am
Ron, that of course is not realistic. When a university faculty member gets promoted from Assistant to Associate and then to Full Professor there is a pay bump. How would our state medical and dental schools be able to recruit and retain faculty? Or for that matter any of our Universities in every field of study?????
Comment by illdoc Wednesday, May 10, 17 @ 11:09 am
“we are prepared to offer 26 votes”
Hahaha. Try again Leader. This is one of the GOP demands. If you’re not willing to put nearly all of the caucus on something that is a key GOP demand, this thing is not going anywhere in the House.
Also, does this mean that the GOP has 26 votes for the tax increase?
Comment by Juice Wednesday, May 10, 17 @ 11:10 am
No promotion then. Unless they sign off on the change.
Comment by Ron Wednesday, May 10, 17 @ 11:11 am
Whenever I was as cranky and irritable as Ron, my mother used to ask me if I was constipated.
Comment by don the legend Wednesday, May 10, 17 @ 11:14 am
illdoc,
We’re hoping that if we ignore him that he’ll go away.
Comment by Gruntled University Employee Wednesday, May 10, 17 @ 11:14 am
Ron:
You’re digging your hole deeper. I’d stop if I were you.
And I certainly hope you don’t own a business with your vindictive and petty nature.
Comment by Demoralized Wednesday, May 10, 17 @ 11:15 am
Demoralized, the state is broke. Something has to give. I know all you public employees think the answer is the highest state and local tax burden in the nation. We can’t do that, it will create a mass exodus, we are losing people faster than any state right now.
Comment by Ron Wednesday, May 10, 17 @ 11:18 am
Ron, You don’t know what you are talking about. When someone is hired they must do what is needed to become tenured by year 7. If someone is not promoted at that ime they cannot be tenured. That’s the rules at all Universities that have a tenure system. What you are suggesting is that we only want someone to stay at a university for a few years and more on? Plus, you said nothing about recruitment and retention issues.
Comment by illdoc Wednesday, May 10, 17 @ 11:18 am
To the Update:
With all due respect, Leader Durkin, this is your Governor’s turnaround agenda item, not some Exelon bill.
You need to be prepared to put up 40 votes.
If a solid majority of your caucus doesn’t even support pension reform, it should not be on your list of demands.
Comment by Free Set of Steak Knives Wednesday, May 10, 17 @ 11:19 am
@ Ron. You’re just joking, right? Because of my own predilection for sardonic humor, my troll detector is sometimes not dialed in.
Comment by Scamp640 Wednesday, May 10, 17 @ 11:19 am
Good advice!
Comment by illdoc Wednesday, May 10, 17 @ 11:20 am
Great analysis, as always, RNUG. I hope that the leaders in the legislative and executive branches of the statehouse read you as religiously as I do.
Comment by up2now Wednesday, May 10, 17 @ 11:20 am
The head buried deep in the sand crowd is strong here.
Comment by Ron Wednesday, May 10, 17 @ 11:21 am
Ron:
Those public employees didn’t write the Constitution. You can complain about it all you want but it is what it is. No amount of petty anger is going to change that.
Comment by Demoralized Wednesday, May 10, 17 @ 11:21 am
What Part Of Diminish Do These Politicians Not Understand? This Is Laughable..I Feel So Sorry For The Good Citizens Of Illinois. Truely Sad State?
Comment by Shake Wednesday, May 10, 17 @ 11:22 am
Great job RNUG finding all those land mines. You could’ve saved yourself the trouble by saying, “If Barbara Flynn Currie and Jim Durkin are both for it. I’m against it!” /s
Comment by Jocko Wednesday, May 10, 17 @ 11:22 am
“Ron, You don’t know what you are talking about.”
You can probably stop there. Ron is a one-trick pony that doesn’t like to get very deep into an issue. It is much easier to repeat the same ideological drivel over and over. We have severe problems, but the solutions are not as “easy” as the Rons of Illinois would have us believe. Society is fragile.
Comment by Ole' Nelson Wednesday, May 10, 17 @ 11:22 am
Sounds like another unconstitutional diminishment. How many Democrats who pose as friends of state workers will vote for this one?
Comment by anon2 Wednesday, May 10, 17 @ 11:23 am
One problem is if earnings above a certain point aren’t pensionable, you can’t take contributions out of those earnings. That will be a nightmare to calculate, especially when someone works overtime. Right now it is all pensionable are you just take, for example, 4% of the total earnings. But if only part of overtime is pensionable, then you will have to determine what part of overtime is pensionable, perhaps 3%. And that percentage could change per person depending on pay raises they received over their career. It would be a mess.
Comment by A Jack Wednesday, May 10, 17 @ 11:24 am
Illinois is sinking fast and instituting the highest tax burden in the nation will not help.
Comment by Ron Wednesday, May 10, 17 @ 11:24 am
Why anyone would want to work for the state of Illinois now or going forward, I do not know. I guess if you have no other choice. Employer of last resort, perhaps. Otherwise, not a chance.
Grim situation.
Comment by jerry 101 Wednesday, May 10, 17 @ 11:25 am
How can you diminish something that you haven’t even worked for?
Comment by Ron Wednesday, May 10, 17 @ 11:26 am
Sounds like this offer to those in private industry:
Give up your weekends or give up raises for the next 10 years.
Either way the words give up don’t sound enticing, do they?
Comment by Anonymous Wednesday, May 10, 17 @ 11:26 am
You want a pay raise Tier 1 employee? Sure, but it’s not part of your pension.
Very simple.
Comment by Anonymous Wednesday, May 10, 17 @ 11:27 am
Ron - should we also just take away all your guns - - same constitutional argument you are making. Go play on facebook or something where your drivel is welcome.
Comment by Dublin Wednesday, May 10, 17 @ 11:30 am
I do not disagree with Ron’s assessment of the financial condition of Illinois, but think his plan to fix it solely on the backs of state workers is ridiculous. Illinois is in for some hard times if we decide to clean up our financial house. I think it is much more doable if we spread out the burden a little wider than just hitting those that have worked for the State. Illinois is a pretty good place to live if you are wealthy. Take a look at the highest tax rates for the surrounding states.
Comment by Ole' Nelson Wednesday, May 10, 17 @ 11:31 am
The inevitable court perusal will take place, burning more time and adding to the debt. Seems like citizens in this state want to see just how high we can take it, rather than pay a penny.
I hope the court refuses to take this on and say, uh, we’ve already ruled on diminishments. Time to look for solutions to pay down the debt, not dream about it going away.
Comment by AnonymousOne Wednesday, May 10, 17 @ 11:31 am
All thanks to RNUG for doing the heavy lifting.
It is increasingly clear that the only real, meaningful pension “reform” is for the General Assembly to do its duty, and adequately fund the pension system. Nothing else is acceptable, and it is unconscionable that they still want to force state employees to pay for decades of fiscal mismanagement by the GA.
As the ILCS wrote two years ago:
“As this opinion has previously observed, our economy is and has always been subject to
fluctuations, sometimes very extreme fluctuations. Throughout the past century, market forces have periodically placed significant pressures on public pension systems. The repercussions of underfunding those pension systems in such an environment have been well-documented and were well-known when the General Assembly enacted the provisions of the Pension Code which Public Act 98-599 now seeks to change.”
And the key sentence: “The General Assembly had available to it all the information it needed to estimate the long-term costs of those provisions, including the costs of annual annuity increases, and the provisions have operated as designed.13″
Finally: “The General Assembly understood that the provisions would be subject to the pension protection clause. In addition, the law was clear that the promised benefits would therefore have to be paid, and that the responsibility for providing the State’s share of the necessary funding fell squarely on the legislature’s shoulders. Accordingly, the funding problems which developed were entirely foreseeable. The General Assembly may find itself in crisis, but it is a crisis which other public pension systems managed to avoid and, as reflected in the SEC order, it is a crisis for which the General Assembly itself is largely responsible.”
Do your jobs. This is on you, not state employees.
Comment by Nick Name Wednesday, May 10, 17 @ 11:32 am
==- Gruntled University Employee -
Emphasis on “it’s better for me”. What about the taxpayers of the state, or the future generation of Illinois, is it better for them ?
Comment by Texas Red Wednesday, May 10, 17 @ 11:33 am
Ron: Read this: http://www.illinoiscourts.gov/Opinions/SupremeCourt/2015/118585.pdf and don’t come back until you do.
Comment by Skeptic Wednesday, May 10, 17 @ 11:34 am
Ole Nelson, I actually am fine with progressive income tax, but that goes with massive spending cuts, pay freezes, and while we amend the constitution for progressive taxes, eliminate public employee benefit protection.
Comment by Ron Wednesday, May 10, 17 @ 11:35 am
==The simplest thing to do immediately is never give a pay raise to a Tier 1 employee.==
Never is a long time. That wouldn’t be fair to folks hired 2000-2010.
While I agree with you there is a strong argument to freeze Tier 1 salaries, it wouldn’t be easy to do it in a fair way. Logic would dictate to have a graduated freeze that impacted longer employees more as they benefited the most from shorting pension payments to pay for their salary increases and benefits. They could still get raises via promotions, but those positions would also be frozen.
==How would our state medical and dental schools be able to recruit and retain faculty?==
Recruiting is not an issue because all new recruits are Tier 2 and would have the normal step/lane pay schedules. All you need is 2 separate salary schedules.
Comment by City Zen Wednesday, May 10, 17 @ 11:38 am
“Do your jobs.”
Agreed, and job one is no pay raise for any Tier 1 worker.
Comment by Ron Wednesday, May 10, 17 @ 11:39 am
Startling epiphany. With Pritzker, DEMS no longer need Labor money. It will be just like Rauner in Reverse. Pritzker will own the DEMS and be the sole funder. My state worker sisters and brothers are thus screwed with this pension deal. I have s long time to work yet before I could retire with a small pension. I feel bad for those that are ready now or soon that will get caught in this before it is overturned by the courts. Good hard workers will have much less than they were promised.
We are talking about real people here. Ron don’t start either. let my words stand unchallenged.
I am now afraid that big business will own the democrats too.
This pension reform is about diminishment
And about corporate profit.
Who pays administrative costs for the401k?
Yep the employee.
This is about profit folks
Go out and have a drink Ron
Afscme’s are getting hit hard
But the reality is that families will have less
Good loyal families who served our state
Makes you feel good doesn’t Ron?
You know what they call people who derive pleasure at others pain?
A sadist.
Enjoy Ron
Comment by Honeybear Wednesday, May 10, 17 @ 11:40 am
City Zen, it’s harsh I know. But Illinois is in very deep doo doo. We will still need to raise taxes obviously. So the private sector will be contributing a lot.
I would hope a good number of Tier 1s would quit so we can replace them with Tier 2s and save even more.
Comment by Ron Wednesday, May 10, 17 @ 11:41 am
==What about the taxpayers of the state or the future generations……..
What a load. If you’re so worried about taxpayers and future generations, we all would’ve attacked paying down our debts years ago when they were a fraction of what they are today? Do you not realize this? Every day, we’re all in it for more.
Comment by AnonymousOne Wednesday, May 10, 17 @ 11:42 am
I’m sorry I forgot to thank you RNUG.
Thank you so much. You are a blessing to all.
Comment by Honeybear Wednesday, May 10, 17 @ 11:43 am
My understanding is that any changes to the constitution would only impact new employees going forward. I believe we have to pay what we owe, and are just wasting valuable time trying to shirk this responsibility.
Massive spending cuts like we have had in higher education and social services over the last 2 years seem extremely irresponsible to me. Destroying our university system seems highly unlikely to do any good for our economy, and will most likely do great damage. It seems very reasonable to have spending freezes (possibly including wages) going forward until we have righted the financial ship. I would think there would be some areas that could possibly be cut with some intelligent thought.
Comment by Ole' Nelson Wednesday, May 10, 17 @ 11:44 am
Ron
You are a sadist.
Comment by Honeybear Wednesday, May 10, 17 @ 11:45 am
= I actually am fine with progressive income tax, but that goes with massive spending cuts, pay freezes, and while we amend the constitution for progressive taxes, eliminate public employee benefit protection. =
Ron may have shown more willingness to reach a Grand Bargain than the actual players in Springfield’s Kabuki theater.
Comment by cover Wednesday, May 10, 17 @ 11:47 am
ERI
Comment by Nick Wednesday, May 10, 17 @ 11:47 am
Thank you RNUG!
Comment by Jimmy H Wednesday, May 10, 17 @ 11:47 am
= I’m sorry I forgot to thank you RNUG.
Thank you so much. You are a blessing to all. =
Agreed, many kudos to RNUG.
Comment by cover Wednesday, May 10, 17 @ 11:49 am
First candidate to announce a plan to pay off the pension debt please move forward to the Governors mansion.
Comment by Generic Drone Wednesday, May 10, 17 @ 11:49 am
I’m digging Durkin’s style.
Put the Madster in the box.
We are all watching Speaker….
Comment by cdog Wednesday, May 10, 17 @ 11:50 am
==Ole Nelson, I actually am fine with progressive income tax==
3% up to $50,000
4% up to $200,000
5% over $200,000
That’s progressive. Can someone please pass this along to JB?
Comment by City Zen Wednesday, May 10, 17 @ 11:50 am
==Illinois is sinking fast and instituting the highest tax burden in the nation will not help.==
Passing pension reform that is in all likelihood unconstitutional will make the required tax increase even higher. Of course, the budget could, and should, be crafted with the presumption that this legislation will not survive a constitutional challenge. Individuals and businesses have good reason to be scared, between the pension debt and the bill backlog, our unpaid bills are on their way to becoming the mother of all state tax increases. But, keep playing the reforms that don’t have the votes fiddle while Rome burns, I’m sure it’ll be fine, one day, eventually.
Comment by AC Wednesday, May 10, 17 @ 11:52 am
Ron
Please identify where you work, please. We want to ensure you or your boss never have to be bothered to have any of us state employees as customers. I’m sure you, your co-workers, and your boss won’t be negatively impacted by the loss of our business, and never have to accept any money from us in payment for services or products… since you have so little respect for us as fellow human beings.
Comment by thoughts matter Wednesday, May 10, 17 @ 11:55 am
How is it that a tax increase won’t help? When our taxes were higher under Quinn, progress was made.
Comment by AnonymousOne Wednesday, May 10, 17 @ 11:56 am
Time to revisit Eric Madiar’s article “ILLINOIS PUBLIC PENSIONS: WHERE TO FROM HERE?”
Whether this stinky proposal can slide past our Supreme Court depends, IMHO, on how far the Court is willing to go in applying the logic of a New York decision in Carroll v. Grumet, 117 N.Y.S.2d 553, 555 (App.Div.. 1952). In that case, in Eric’s description (footnotes omitted);
“[T]he court held that a plan adopted by New York City granting firemen ‘emergency cost of living increases’ designed to foster continued employment by increasing take home pay, without affecting their pensions, squared with the New York Constitution’s Pension Clause. The plan
provided cost of living adjustments of ‘$420 per annum upon [the] condition that such increase should not constitute salary for the purpose of computing his pension upon retirement.’”
“The court tersely responded that ‘[i]f the increased compensation had been unconditionally granted by the City without question it
would have constituted salary or compensation for pension purposes.’ In other words, the fact that the increase was called a ‘cost of living
increase’ or ‘bonus’ was legally irrelevant. What was relevant, the court observed, was that the plaintiff voluntarily accepted the so called
‘bonus’ under the express condition that it ‘not be regarded as salary for pension purposes,’ and that the plaintiff was not otherwise legally entitled to receive the increase. Taken together, the court concluded that plaintiff’s acceptance of the increase under the stated condition constituted a waiver of his pension rights for valid consideration, and was consistent with the New York Constitution’s pension provision.”
(Rich: If this is too long I can cut it down)
Comment by 37B Wednesday, May 10, 17 @ 11:58 am
City Zen, how about this:
3.5% up to $50,000
4.5% up to $200,000
5.5% over $200,000
Comment by Ron Wednesday, May 10, 17 @ 11:59 am
Honeybear, nope, just a realist
Comment by Ron Wednesday, May 10, 17 @ 12:00 pm
Is Durkin’s statement accurate?
“language identical to the House Republican pension reform plan, House Bill 4027, introduced in March”
(Great job RNUG on analysis. That’s some truly tangled word-twine. Glad folks like you are able to enlighten folks like me.)
Comment by cdog Wednesday, May 10, 17 @ 12:02 pm
37B, thanks, that is a rational court decision.
Comment by Ron Wednesday, May 10, 17 @ 12:03 pm
I’m curious what people who are knowledgeable about this think about the Tier 2 people who are already receiving such diminished benefits.
Aren’t there constitutional questions about their low benefits as they are?
Comment by State worker Wednesday, May 10, 17 @ 12:05 pm
Sorry Shake, I have never worked for any government anywhere, have never wanted to, and almost certainly never will.
But, back to the topic. No wage increase for any Tier 1 unless they agree it’s not part of their future pension. Very simple.
Comment by Ron Wednesday, May 10, 17 @ 12:09 pm
RNUG,
Thanks for your work. As a Tier 2 employee in SURS I’m a little confused by some of your observations. You said they are reducing the multiplier from 2.2% to 1.25%? I don’t know how that is possible considering Tier 2 teeters on the brink of failing to meet Safe Harbor provisions.
Also much of what you write about Tier 2 is already in place such as normal retirement at age 67, annuity calculation based on 10 final years, survivor benefit at 2/3 of annuity. I don’t understand why this bill would reiterate that.
Comment by Impasse Casualty Wednesday, May 10, 17 @ 12:09 pm
Wait, Illinois is collapsing, our tax burden is too high, we can’t afford another penny…but a graduated tax is a good idea? Pick a lane there dude.
Comment by Skeptic Wednesday, May 10, 17 @ 12:13 pm
RNUNG, Correct me if I’m wrong, but I assume this pension reform bill (HB 4045) will not impact current retirees or those whom retire before this bill passes.
Comment by Mama Wednesday, May 10, 17 @ 12:18 pm
===Wait, Illinois is collapsing, our tax burden is too high, we can’t afford another penny…but a graduated tax is a good idea? Pick a lane there dude.===
Wrong. Illinois is one of the lowest tax states to live in if you are wealthy. The tax burden is on the middle class. Graduated income tax is exactly what this state needs. If we followed Iowa’s tax system - we would have a surplus.
Comment by Dublin Wednesday, May 10, 17 @ 12:19 pm
Every year they take out miney for the 3% annual adjustment. do employee contributions go down then ifnthis option goes away? and if you habe already paid for it, its a vested right. so how can they remove salary from a vested system if you do mot surrender your constitutional right?
lots of federal case law states you cant demand people gicenup constitutionaly protected rights; especially not by saying tou will diminsh their current benefits if they dont gicenup something.
Enron and otheres raided employee pensions and we called it criminal… get a mob of people behind it and do it to people not in the mob (govt employees) and its ok?
again tier 2 employees are rrducing the deficit. roughly 66% of the pension payment is a ramped up self inflicted extra papyment you can reduce that to a much smaller extra payment and save billions each year. then take the current pension bond payments and direct them to pay down the deficit when the bonds are paid off; do a chicago casino and ditrct half the tax to state and half to chicago pensions to pay those down
legalize marijuanna tax it and mandaye the money goes to pay down oension deficit.
there fixed it without a tax increase.
Comment by Ghost Wednesday, May 10, 17 @ 12:22 pm
Ron - Your rates are a tax hike on everyone making over $67,000. My break-even is $160,000. We’d have to figure out if single and married filers would be subject to different thresholds. Which, BTW, a point most progressive tax proponents forget is that most states with progressive taxes have different schedules for single/married. CA, NY, CT and others double the thresholds for married filers. I haven’t heard anyone even broach the subject.
Comment by City Zen Wednesday, May 10, 17 @ 12:23 pm
==If we followed Iowa’s tax system - we would have a surplus.==
Iowa taxes retirement income.
Comment by City Zen Wednesday, May 10, 17 @ 12:24 pm
“Wrong. Illinois is one of the lowest tax states to live in if you are wealthy. The tax burden is on the middle class. Graduated income tax is exactly what this state needs. If we followed Iowa’s tax system - we would have a surplus.”
No it isn’t. You seem to forget that RE taxes are outrageous in Illinois.
Comment by Ron Wednesday, May 10, 17 @ 12:25 pm
Great points City Zen.
Comment by Ron Wednesday, May 10, 17 @ 12:25 pm
==Texas Red==
What’s best is no change to the pension that the state promised me when I signed on but if you’re going to make me choose a diminishment then I’m going to make the best choice for me and my family. Don’t even insinuate that you wouldn’t do the same.
Comment by Gruntled University Employee Wednesday, May 10, 17 @ 12:26 pm
Skeptic, I have always acknowledged that a progressive income tax makes sense. But it should not be done without massive spending cuts/wage freezes AND eliminating benefit protection for public workers.
Comment by Ron Wednesday, May 10, 17 @ 12:27 pm
===No it isn’t. You seem to forget that RE taxes are outrageous in Illinois.===
If you make more than $1M - the RE taxes are chump change compared to what kind of income tax you would be paying in a state with higher income tax. Plus, with all the subtractions for wealthy taxpayers and/or business-owners…paying RE taxes is peanuts.
Comment by Dublin Wednesday, May 10, 17 @ 12:29 pm
===Iowa taxes retirement income.===
OK…
Comment by Dublin Wednesday, May 10, 17 @ 12:30 pm
RNUG (great analysis!) writes about the new defined contribution plan:
KEY POINT - the employer contribution rate may be set on an employee by employee basis. Talk about an opportunity to play favorites with employees!
Not only is this a key point but it is, in itself, strong grounds for deeming the bill unconstitutional. A law must apply to all similarly situated persons equally.
Comment by Quiet Sage Wednesday, May 10, 17 @ 12:31 pm
First and most importantly…
Thank you to both Rich and - RNUG -
Allowing us that follow on the blog the expertise of - RNUG -, tyats just another reason (after reason, after reson… ) why Rich’s blog is THE place.
Thank you both for sharing the gifts you both have. We’re all really lucky.
Now, to the Post,
If you wade through the trolling in comments here, where the drive-bys, the nuggets of knowledge here, we all can see what’s at play, how it falls, and where it works and fails.
My only points of concern I have? It’s the constitutionality and math, and the honesty of both when reading the assessment and the fallout.
I’ll keep reading, and keep learning.
Great stuff.
Oswego Willy
Comment by Oswego Willy Wednesday, May 10, 17 @ 12:35 pm
Maybe, but most people making $1M annually buy expensive real estate that comes with expensive RE taxes in Illinois.
Someone making $1M probably owns a $4-5M home. What do you think RE taxes are on a home like that?
Comment by Ron Wednesday, May 10, 17 @ 12:35 pm
First,
Thank you again RNUG for your great work on pensions. The new reform may also be rejected by the ILSC. It’s forced consideration. If I remember correctly, RNUG said previously that even the reform bill that the unions helped craft a few years ago with Cullerton would have likely been found unconstitutional.
Second,
I hate to keep saying this, but as long as public worker pensions are attacked by certain individuals and groups, I have to repeat that Bruce gorged himself at the public employee pension trough, for decades. It’s not right to attack these pensions and their working class recipients while giving Bruce a pass.
How much money did Bruce off of unionized public employees all these years? Why was he so heck-bent to get the TRS pension account that he went personally to bid or compete for it–since he said public pensions are financial tumors destroying America?
Third,
To those on the far left or anyplace else on the political spectrum at any given time who disapprove of a super-rich candidate who runs as a liberal, please don’t cut off the face to to spite the nose. Haven’t we learned anything from Quinn and Clinton losing? Please don’t be purists, when so much is at stake. We are living it in Illinois with Rauner. Look at what’s happening in the federal government with health insurance, and what could likely happen in SCOTUS.
Comment by Grandson of Man Wednesday, May 10, 17 @ 12:37 pm
I add my thanks to RNUG for the exhaustive/exhausting analysis. I also agree with him and Word (and a number of others) about the constitutionality issue. But maybe passing the darned thing is the right thing to do to break the logjam, and see how the chips fall.
Comment by Archiesmom Wednesday, May 10, 17 @ 12:38 pm
If its such a great idea and absolutely essential, why only 26 votes? why not take a caucus position and put your whole caucus on the board? Unless its NOT an absolutely great idea. Madigan should guarantee enough votes to pass the bill with all HGOP standing present and accounted for. Of how about this, shared sacrifice means half DEM and half GOP. If you want to be an equal partner, then you have to share political pain equally too.
Comment by Anonymous Wednesday, May 10, 17 @ 12:38 pm
Okay, freeze Tier one and you open the state up to billions in lawsuits.
For example take a Tier one woman and a Tier Two man doing the same exact job. Give the Tier two man a pay raise, but not the Tier one woman. They are doing the same job with the same years of experience , yet one is getting paid more? You can do the same with race, or age. The state will get hauled into court constantly over such a scheme as a Tier one wage freeze. And I suspect there are plenty of federal wage laws that will get you too.
Comment by A Jack Wednesday, May 10, 17 @ 12:45 pm
@Ron
I have no opinion as to whether Carroll is a rationale decision under either New York or Illinois law. I would note, though, that the current pension proposal goes well past the one-off bonus/cost of living situation considered by the New York court and is clearly designed to coerce current Illinois workers into giving up already earned benefits in order to get at least some cost of living adjustment reflecting their salaries at retirement (as opposed to the fractional starting pension amount represented by their original starting salaries).
Comment by 37B Wednesday, May 10, 17 @ 12:46 pm
===Someone making $1M probably owns a $4-5M home. What do you think RE taxes are on a home like that?===
I’ll do the math for you since it seems to not be your strong point. Illinois average RE tax is around 2.2% - - so on a $4m home - that’s $88K.
Missour top tax rate = 9.6%. If you make $4m - your tax is $384K.
Are you able to comprehend less than/greater than?
And there are plenty of people in IL that make well over $4m. Not a lot of home in IL over $4m.
Comment by Dublin Wednesday, May 10, 17 @ 12:47 pm
Dublin, horrible assumptions. I was talking about a home of $4M and an income of $1M.
Plenty of $4M homes in Chicago metro.
Missouri has very few millionaires, I wonder why.
Comment by Ron Wednesday, May 10, 17 @ 12:50 pm
===Third,
To those on the far left or anyplace else on the political spectrum at any given time who disapprove of a super-rich candidate who runs as a liberal, please don’t cut off the face to to spite the nose.===
There is a big difference between a lefty (i.e., Pritzker) and a Rauner/Trump type when it comes to running our government. Pritzker believes in government and wants to make it work. That is a significantly important difference between two rich people who are running for office - where the other doesn’t believe in what he is governing.
Would Bruce Rauner run a business that he doesn’t believe in? If so, how would that business fare? Would it really be successful?
Comment by Dublin Wednesday, May 10, 17 @ 12:52 pm
The “consideration” concept is fine, so long as one is given an honest choice as opposed to a Hobson’s Choice. For example, if the offer were something like giving up the 3% AAI in return for an immediate “X” per cent increase in salary or keeping the AAI and giving up the immediate salary increase, you would have true “consideration”. In any event, this proposal doesn’t even provide an estimate as to the cost savings to be realized by the state. Without knowing that number, the proposal is just another gimmick to buy some more time (as noted by previous commentators).
Comment by Retired SURS Employee Wednesday, May 10, 17 @ 12:53 pm
Ron: Not a horrible assumption. Rauner made $180M. Does he live in a $180m home? or a home worth 4X his income. No.
Your assumption are incorrect - Missouri, proportionately, has nearly as many millionaires as IL. Besides that…Your hero, Rauner, wants us to be more like MO anyway.
Comment by Dublin Wednesday, May 10, 17 @ 12:56 pm
Ron, when will the state stop forcing millionaires to buy $5 million homes?
You deserve a Nobel prize for identifying the top issue facing the state: the property tax burden on $5 million homes.
You’re certainly making the troll-tolls today.
Comment by wordslinger Wednesday, May 10, 17 @ 12:56 pm
@Retired SURS Employee
It’s a “Hobson’s Choice” brought to you by the people at Procrustes Travel Lodge.
Comment by 37B Wednesday, May 10, 17 @ 1:06 pm
Ron, what a popular fellow you are today. You have a gift of getting folks to respond. Ron’s To Do List Today: 1. “Get people’s goat”. Check. 2. “Be called a troll”. Check. 3. Be called “Perfidious ‘…….
Comment by Anonymous Wednesday, May 10, 17 @ 1:12 pm
==the burden’s on the middle class==
So at what time in history has that not been true. That’s what the middle class is for. We’re so happy, happy, happy to have jobs and the wealthy love that so that we can pay the burden of taxes to support those below and those above.
A very real problem, however, is that the middle class is shrinking. Where will the money come from?
You saw the results of the advisory on extra taxation on millionaires. And the speedy action that resulted from that vote too, right?
Comment by AnonymousOne Wednesday, May 10, 17 @ 1:15 pm
== RNUG, Correct me if I’m wrong, but I assume this pension reform bill (HB 4045) will not impact current retirees or those whom retire before this bill passes.==
Nope. That is why there is a delayed effective date.
Comment by RNUG Wednesday, May 10, 17 @ 1:17 pm
==That is why there is a delayed effective date.==
There were quite a few retirements the last time a pension bill passed. I suspect you’ll see the same thing here.
Comment by Demoralized Wednesday, May 10, 17 @ 1:23 pm
==For example take a Tier one woman and a Tier Two man doing the same exact job. Give the Tier two man a pay raise, but not the Tier one woman. They are doing the same job with the same years of experience , yet one is getting paid more?==
Tier 1 woman because her pension is worth a whole lot more than the Tier 2 man’s pension.
You’re not looking at total compensation. Tier 1 pensions cost more, so more of that Tier 1’s compensation goes into the employers pension contribution. There is less left over for Tier 1 raise or health benefits.
Comment by City Zen Wednesday, May 10, 17 @ 1:25 pm
Interesting note on CPI-W vs CPI-U. That may not actually be a typo, but way to adjust the growth rates.
CPI-W is a subset of the larger CPI-U data set and typically grows at a slower rate. CPI-W is used to set the yearly increases in Social Security.
Using the 1982-1984 base line:
CPI-W for March 2017 = 237.656
CPI-U for March 2017 = 243.801
Comment by TrumpsSmallHands Wednesday, May 10, 17 @ 1:30 pm
== TrumpsSmallHands ==
Good point. I just assumed it was a typo since all the other sections referenced CPI-U.
Comment by RNUG Wednesday, May 10, 17 @ 2:07 pm
== There were quite a few retirements the last time a pension bill passed. I suspect you’ll see the same thing here. ==
Maybe that is the intent; to scare eligible Tier 1 employees into retirement.
Comment by RNUG Wednesday, May 10, 17 @ 2:16 pm
Ron seems to think that the pension funding issue is solely due to state employees. Not surprising that he’s ignorant, because everyone else seems to think that state employees are the biggest source of the problem.
Not even close. More than half of the underfunding is due to the Teachers Retirement System, and the underfunding of the State University and State Employees Retirement Systems are about the same. The state employees he loves to had are less than 25% of the problem.
He is right that “no pay raises” or “no pay raises unless the employee agrees to pension changes” are perfectly legal under the Illinois and federal constitutions. However, if he thinks we are going to keep quality teachers and university professors after we adopt that system, he’s truly crazy. And if he thinks we will be able to hire quality teachers and professors once we’ve pulled this stunt once and put everyone on notice that we can and will do it again, he’s even crazier.
Comment by Whatever Wednesday, May 10, 17 @ 2:33 pm
Whatever, I am a huge proponent of teachers pensions being funded from the school districts that employ the teachers.
And allowing municipal bankruptcy in Illinois.
Comment by Ron Wednesday, May 10, 17 @ 2:43 pm
Missouri was ranked number 38 of 50 states for milliionaire households/household. Illinois was 20.
That was for 2015.
Comment by Ron Wednesday, May 10, 17 @ 2:44 pm
In 2016, IL was 16 and Missouri 37
Comment by Ron Wednesday, May 10, 17 @ 2:47 pm
As stated previously Whatever, all new hires are Tier 2 right now anyway.
Comment by Ron Wednesday, May 10, 17 @ 2:48 pm
What is this pay raise you speak about?
Comment by Anon Wednesday, May 10, 17 @ 3:06 pm
Adding my thanks to RNUG. You share your expertise and much time and effort generously.
Comment by Earnest Wednesday, May 10, 17 @ 3:11 pm
I think there must be a typo in this and similar legislation. It reads Consideration. But it sounds like they meant Coercion.
Comment by Joe M Wednesday, May 10, 17 @ 3:32 pm
==scare Tier I employees into retirement==
Wow, now that’s a solution. Cannot possibly win this one.
When taking early retirement, often employees are too young to be set out to pasture. They find another job, while collecting that massive public pension. Everyone attacks, saying double dipping, taking advantage, you name it.
So, if they don’t retire, they’re a drain.
Which way do folks want it?
Comment by Anonymous Wednesday, May 10, 17 @ 3:37 pm
Joe M, then the state must never give a raise to any Tier 1 employee.
It’s really simple.
Comment by Ron Wednesday, May 10, 17 @ 3:44 pm
You have a choice! We will cut off your leg, but you keep both arms, or we cut off an arm, but you keep both legs. The severed limbs will be sold as medical tissue and you will get a portion of the proceeds. Choice and consideration! What a deal!/s
Comment by DuPage Wednesday, May 10, 17 @ 3:49 pm
“… we are prepared to offer 26 votes, which is our pro-rata share of votes, to support a structured roll call on this issue.”
Geez, and I thought all those guys were independent thinkers.
I’d keep that stuff out of the press release next time. Not exactly Lincolnesque.
Comment by wordslinger Wednesday, May 10, 17 @ 3:54 pm
RNUG, there are very few state workers left whom are paying into the state pension funds due to being part of the ‘Tier 2′ 401K retirement group. On top of that, the state has not been paying their share into the state pension funds. Is there anything the retirees can do to keep the state pension funds from going belly up?
Comment by Mama Wednesday, May 10, 17 @ 4:03 pm
- DuPage - Wednesday, May 10, 17 @ 3:49 pm: =
You are right. No matter how you slice it, the workers lose.
Comment by Mama Wednesday, May 10, 17 @ 4:07 pm
The last I heard, the state hasn’t been offering many raises, and that may not change for quite a while. I don’t see many Tier I employees choosing to significantly diminish their pension benefits on the hope that raises are going to suddenly start flowing, again.
Comment by Pelonski Wednesday, May 10, 17 @ 4:10 pm
Ron: OK, I’ll bite. Let’s say we don’t give Tier 1 employees any raises. How much does that save? Put a dollar figure on it or go away.
Comment by Skeptic Wednesday, May 10, 17 @ 4:21 pm
Dear House Republican Leader Jim Durkin,
If this pension reform bill is so great, why not have 100% of your Republicans vote ‘Yea’.
Comment by Mama Wednesday, May 10, 17 @ 4:23 pm
== … there are very few state workers left whom are paying into the state pension funds due to being part of the ‘Tier 2′ 401K retirement group. … Is there anything the retirees can do to keep the state pension funds from going belly up? ==
-Mama-, first off, the current Tier 2 plan is not a 401K plan. Unless you are talking about the SURS self managed members which is similar to.a 401K, all the rest of the Tier 2 employees (actually, the majority) are in the Defined Benefits category for their plan … which means they ARE paying into the pension funds, the same pension funds the Tier 1 members pay in to.
Second, if you take the IL SC rulings literally, it doesn’t matter if the pension funds go broke, the pensions STILL have to be paid … presumably from then current GRF revenue.
However, the best thing employees / retirees can do is contact their Legislators and tell them to properly fund the pension funds.
Comment by RNUG Wednesday, May 10, 17 @ 4:23 pm
=RNUG Wednesday, May 10, 17 @ 4:23 pm: =
Thank you for clearing that up for me. I did not know SURS’s Tier 2 was different than the rest of the Tier 2 retirement benefit.
Comment by Mama Wednesday, May 10, 17 @ 4:47 pm
== Aren’t there constitutional questions about their (implied Yier 2) low benefits as they are? ==
No constitutional issue. It is an IRS “safe harbor” issue, specifically for the Tier 2 non-coordinated members (don’t pay into SS). If the Tier 2 defined benefit pension plan were to pay less than Social Security would, then the State plan would no longer be considered “qualified” and the State would have to start paying into Social Security for those members. This could happen due to a cap in the Tier 2 plan. It would primarily affect teachers and some law enforcement titles, plus a scattering of other job titles.
Comment by RNUG Wednesday, May 10, 17 @ 4:51 pm
Ron, you should just change your nickname to “No tier 1 raises,ever”. It would save you from having to type it on every post.
Comment by Han's Solo Cup Wednesday, May 10, 17 @ 4:53 pm
If I were a current employee, I would never agree to receive raises to be counted toward your pension. Why? No one is legally guaranteed a raise during employment. However, the 3% compounded Cola one receives during retirement is legally protected.
Comment by Mama Wednesday, May 10, 17 @ 4:54 pm
== Also much of what you write about Tier 2 is already in place such as normal retirement at age 67, annuity calculation based on 10 final years, survivor benefit at 2/3 of annuity. I don’t understand why this bill would reiterate that. ==
A lot of the reiteration is in the sections where Tier 1 members are offered a “choice” to switch to Tier 2 or in the section where the GA is apparently trying to do some retroactive “clarification” to the original Tier 2 bill. Remember, in the arcane area of bill writing, just changing a word or comma in a sentence or paragraph gets that section flagged as new (underlined in the proposed bill).
Comment by RNUG Wednesday, May 10, 17 @ 4:56 pm
Many many thanks once again to RNUG! I agree chances slim to pass constitutional muster. And I vote to delete all Ron’s comments, takes away from the very serious issue at hand
Comment by Former Merit Comp Wednesday, May 10, 17 @ 4:59 pm
==Is there anything the retirees can do to keep the state pension funds from going belly up?==
Pay taxes on their retirement income without every politician dropping the idea faster than you can say “AARP is OG”?
Comment by AC Wednesday, May 10, 17 @ 5:00 pm
Mama-with respect, I am tier 1 in TRS. I am in the pipeline with two years left before I retire. My raises are legally guaranteed by my school district. Since these raises are important to my overall calculation towards my pension, I may have to choose raises in the future to be included, instead of the 3%. Hopefully the ISC will rule this pension bill unconstitutional.
Comment by JGG Wednesday, May 10, 17 @ 5:16 pm
== I did not know SURS’s Tier 2 was different than the rest of the Tier 2 retirement benefit. ==
That’s understandable. There are 5 different funds; each have their own rules. Add in whether or not they contributed to Social Security. Then add in Tier 1 and Tier 2 differences. Plus some of the plans, like SURS, have different options. You end up with somewhere between 10 and 30 permutations of a pension.
Comment by RNUG Wednesday, May 10, 17 @ 5:19 pm
Former, Illinois’ insolvency is very serious and I love the state, so I’m looking for real solutions other than taxes. Deep spending cuts and wage freezes are a must, before any tax increase. User fees should be jacked too. Why not double the cost of drivers license and park fees? We could close one of the state schools like western or eastern and spread the money to the other state universities. Force consolidation of the far too many governmental bodies in Illinois. No pensions for elected officials or public employees as long as our silly state Constitution protects and guarantees them.
Let’s start with these simple ideas before we talk income tax.
Comment by Anonymous Wednesday, May 10, 17 @ 5:23 pm
- JGG -
Please, please, PLEASE, run a spreadsheet of your choice put to your projected life expectancy (use the MetLife tables, they are generally recognized).
Being that close to retirement, and with the exemption not applying any change until the end of any current contract, I think you will find the 3% AAI is more valuable than a couple of years of raises.
Comment by RNUG Wednesday, May 10, 17 @ 5:26 pm
== No pensions for elected officials or public employees as long as our silly state Constitution protects and guarantees them … ==
Then expect to pay more out up front in salary.
Comment by RNUG Wednesday, May 10, 17 @ 5:28 pm
RNUG, my contract with the district is over in 2018-19 school yr. I did not realize that there was an exemption not applying any change to any current contract. I think I’m pretty well informed on this issue, but that I could not find. If that’s the case then I will definitely run the numbers because, if I’m understanding you correctly my last two years will be included in my overall calculation because of my existing contract. Thank you! Your insight is very much appreciated.
Comment by JGG Wednesday, May 10, 17 @ 5:42 pm
Let me jump in and clarify a couple of items.
The bill is highly severable. A lot of what is in it is likely to survive a constitutional challenge. All the stuff that applies to new hires should survive … although I question the fiscal wisdom of some of it. Do expect parts of this bill to become law if passed and signed.
The part I expect will be found unconstitutional is the imposed choice on Tier 1 of diminishment A or diminishment B. As -37B- pointed out, it goes quite a bit beyond the NY ruling in Carroll. Plus Illinois courts, while considering other state’s case law, are not bound by those decisions.
Comment by RNUG Wednesday, May 10, 17 @ 5:50 pm
== I am tier 1 in TRS. I am in the pipeline with two years left before I retire. My raises are legally guaranteed by my school district.==
This has 6% salary spike written all over it.
Comment by City Zen Wednesday, May 10, 17 @ 5:51 pm
Anonymous has an idea, but since we only double this and double that, and consolidate this education facility and so on and so on, isn’t that selective, where as an income tax is a burden shared by all that work, those that don’t work have it worse, don’t they.
Comment by Living it daily Wednesday, May 10, 17 @ 5:51 pm
Huge thanks to RNUG, now, and spanning back over many years and many many volunteer hours of clarification on behalf of others.
Comment by State worker Wednesday, May 10, 17 @ 6:03 pm
- JGG -
First, the effective date is mid 2018 unless delayed by court action, so you’re going to get one of those years regardless.
Second, even without the raises, the Tier 1 AAI will make up a couple of years of missed raises fairly quickly. Yes, you start lower but that 3% compounding works. Over 20 years or more, there will be a significant difference in total payment received.
Note: I’m just guesstimating you are around 60 and will live to 84 or 85.
Adding, everyone’s mileage will vary, but my general advice to anyone would be to keep the AAI if you are within 10 years of retirement. Each person will need to run their own numbers; the State isn’t going to help you with this one.
Comment by RNUG Wednesday, May 10, 17 @ 6:05 pm
== This has 6% salary spike written all over it. ==
I assumed that.
Comment by RNUG Wednesday, May 10, 17 @ 6:06 pm
Thank You RNUG! Again your advice is very much appreciated.
Comment by JGG Wednesday, May 10, 17 @ 6:19 pm
Regarding the 2.2% vs 1.25% multiplier as it pertains to Tier 2…
At first I thought that this multiplier would be forced upon us but after closely reading the bill (http://www.ilga.gov/legislation/100/HB/10000HB4045.htm) I’m not so sure. I’m in SURS (Article 15) so I write from that perspective.
On 40 ILCS 5/1-161 (beings on page 57 line 19)…it states the multiplier change in “g.” But the beginning of this section calls these “optional benefits for certain Tier 2 members” and that it applies to “a person who, on or after 6 months after the effective date of this amendatory Act of the 100th General Assembly, first becomes a member or a participant under Article 14, 15, or 16” AND who does NOT make an election of choices between “b” and “c.”
It sounds like current employees in Tier 2 are not affected because they did not become new members “on or after 6 months after the effective date of this amendatory Act of the 100th General Assembly.” Then parts B and C confuse me because it sounds like a Tier 1 person choosing to move into a Tier 2 pension. Why offer a Tier 2 employee the election choice of the Tier 2 benefits they already have?
And what do they mean by “optional benefits” and “certain” Tier 2 members?
Comment by Impasse Casualty Wednesday, May 10, 17 @ 6:22 pm
So assuming something like this happened. What is the efficiency of paying down the debt as a result?
Comment by Anonymous Wednesday, May 10, 17 @ 6:23 pm
== Huge thanks to RNUG, now, and spanning back over many years and many many volunteer hours of clarification on behalf of others. ==
I’m constantly amazed at how little most people understand the 5 State pension systems.
My goal is (a) to get participants to understand what they have and (b) to hopefully educate some policy makers at the same time.
I’ve probably succeeded more at (a) than (b).
Comment by RNUG Wednesday, May 10, 17 @ 6:24 pm
== So assuming something like this happened. What is the efficiency of paying down the debt as a result? ==
Well, they haven’t published any projections or scored the bill yet since it was just introduced.
But my take on it, if the Tier 1 forced choice changes don’t survive, is the savings will be a rounding error on the existing pension debt. And if the State loses the “safe harbor” provision, it will cost the taxpayers more than the current situation.
(I’m heading, using the term taxpayer, because exactly who will pay is going to depend on whether or not the State manages to cost shift the “normal” pension costs to the local school districts.)
Comment by RNUG, Wednesday, May 10, 17 @ 6:31 pm
hedging, not heading
Comment by RNUG Wednesday, May 10, 17 @ 6:32 pm
Ron @ 2:48 ==As stated previously Whatever, all new hires are Tier 2 right now anyway.==
And if you arbitrarily cut Tier 1 employees’ salaries now unless they accept pension cuts, they can do the same thing to Tier 2 employees or even some new Tier 3, 4 or 99 employees tomorrow. Would you take a job as a grade school teacher or university professor if Springfield demonstrated that it can and will force your employer to cut your pay, regardless of your personal merit, whenever they feel like it? Teachers aren’t exactly overpaid, and the market for university professors is pretty competitive. Get what you pay for, and Illinois will lose out on quality.
Comment by Whatever Wednesday, May 10, 17 @ 8:37 pm
Thanks again RNUG and you’re right about folks needing to run the numbers. For me the tipping point is age 60, at 59 and earlier the 3% AAI is the way to go, at 60 it’s almost even and over 60 the Salary produces the best outcome for me.
Comment by Gruntled University Employee Thursday, May 11, 17 @ 7:32 am
Thanks RNUG! Good info.
Comment by logic not emotion Thursday, May 11, 17 @ 11:32 am