Chicago Pension Reform

[ripper1]

I do not disagree.... but others have said (do not know if true) that the plan was funded just a few years back (IIRC, in the 80% range).... so what has happened in the last decade? I do not know if it is all due to not funding their part or not... could be...


However, it also does appear that the funding was not properly thought out as there is no money to make up the difference.... and that if nothing is done then all people with pensions will not get anything.... so something has to give... but hey, there is that pesky law (which I remember Texas passing a few years back and I thought it was very stupid to pass)....

So, you cannot tax enough to pay for the shortfall.... you cannot change the rules to make it where it can last.... so what do you do Seems to me that the only thing left is BK... as that is a federal law and the Illinois law is then mute....

Sorry to say that not all contracts work out... I would hate to be on the short end of this problem and do feel sorry for the people who are.... but life happens....


BTW, look at Greece.... they had to cut much more than Illinois and Chi will have too.... and they still are a basket case....

There will be no bankruptcy in Chicago. They will get their wall street and corporate partners to start ponying up.

 

[daylatedollarshort]

This is a problem. Just because a majority of people don't have something doesn't mean they should get to vote it away for those that do. Maybe alter it for the future (like my private mega crop did 18 years into my career), but not undo contracts that were already honored by one party.

My DW is a RI teacher and got screwed by our government, who added 7 years to her retirement age, reduced her benefits and increased her contributions. This sets a terrible precedent about being able to vote away contracted obligations just because the angry mob is jealous.

I'm not making a value judgement either way. I just think realistically this is what will happen and has started to happen, as in Detroit and multi-employer pensions plans.

Thomas Jefferson said, "A democracy is nothing more than mob rule, where fifty-one percent of the people may take away the rights of the other forty-nine. ” I don't have a crystal ball, but with ~$3 trillion in public pension debt at the state level alone and a shrinking middle class, I don't see states, cities and municipalities being able to tax their way out of this, the gaps are just too much per person:

"The bottom line, Inman said, was that there were $3 trillion worth of unfunded pension liabilities at the state level, and $400 billion of unfunded liabilities at the large-city level. That turns out to be about $10,000 per American citizen. “That’s something that we really have to think about, and it has not gotten significantly better.....Chicago’s unfunded liabilities are 10 times its revenues. Just assume that they’re going to have to pay 5% of that [number annually]. That means you’re looking at 50% of their cash that will have go to pensions.”

Source: Underfunded Pensions: Tackling an 'Invisible' Crisis

 

[ERD50]

Most retired state workers do not end up with huge pensions-those are not that common. For instance in Nevada the average state worker gets a pension of 20k. ...

Careful with averages (and this thread is about Chicago pensions):

https://www.illinoispolicy.org/reports/fact-finder-pension-benefits-of-chicago-workers/

Average pension benefits are one of the most commonly used and misleading pension statistics. That’s because averages include older retirees who’ve been retired for a long time and short-term workers who receive relatively small pensions for their limited time working for government.

A more appropriate and accurate measure of how generous pension benefits have become is the average pension for a worker who retired recently (within the last three years) and dedicated his or her career (at least 30 years) to city government. Career workers make up about half of all currently retired city workers in Chicago.

... The average pension for Chicago teachers is $47,700, which includes short-term workers and individuals who retired years ago at much lower compensation levels. But the average pension for a career teacher in Chicago who recently retired is $71,700

And 3% COLA.

Illinois government workers do pay into SS. ...

Careful - some IL govt workers pay into SS. Teachers, for example, do not.

Setting the facts straight about pensions

.. a decision made many years ago by the state ruled that Illinois would not be a Social Security state when it came to its teachers. Teachers do not pay into Social Security.

I agree that the states need to pay what was promised. ...

Needs? What if they don't have the money? And how about a city (this thread is about Chicago Pensions)?

In my field I worked for less $ in return for that pension. I could have made more $ in private. Both my siblings are retired from IL and the same was true for their professions.

I'll skip over the 'worked for less' comment, since there are many components to 'total compensation', some of which are not monetary.

But a promised pension was also part of the deal for my career at MegaCorp. But they could go bankrupt. Then it falls to the PBGC ( contributions were made to them for this insurance), and in that case pensions will be paid with a cap in place (unless/until the PBGC runs out of money), and no COLA in either case.

Why should municipal employees of a BK employer be treated differently than private employees of a BK employer?

-ERD50

 

[W2R]

Thanks, everyone.