Illinois Pension Reform

[ripper1]

All I will say... is that it is easy to have opinions when it's not your pension that is going to be affected.[/QUOTE Your stats show your retirement is in 2012 sometime. You will probably be all right by the time they get this thing up and running.

 

[Chuckanut]

Well put. There is no doubt in mind that vast majority of folks private system pension was frozen and/or converted into a defined contribution system got hosed.

Hosed is right. Read the book "Retirement Heist" about how private companies legally drained pension funds, and then later cried that they were underfunded.

I have seen no move to reform these wrongs. Just as i have seen no significant move to reform the 'modernizations' that allowed the banking crisis which drove our economy over a cliff.

We have the best government money can buy.

 

[ripper1]

ERD50, I didn't hear the Union guy come up with any suggestions other than they just want to be part of the representation. A lot of his retort was about the pension holidays or missed payments by Springfield into the funds and how the employees made all their payments and the unfairness now for this to be solely on the backs of the employees.

 

[ripper1]

Hosed is right. Read the book "Retirement Heist" about how private companies legally drained pension funds, and then later cried that they were underfunded.

I have seen no move to reform these wrongs. Just as i have seen no significant move to reform the 'modernizations' that allowed the banking crisis which drove our economy over a cliff.

We have the best government money can buy.

Bought and paid for absolutely.

 

[MichaelB]

Keeping this on topic will help it avoid the same fate as previous threads.

 

[Steel Rain]

Don't forget Illinois had one of the lowest tax rates before then. Even at a flat across the board 5% it is still comparatively low.

Well, Im not sure this is true. But even if it is, I saw just last week that we are in the top 5 states for overall taxes, and its no doubt it will get even higher over the next few year. I would leave the state, but DW is rooted here so strongly that thats not realistic in the near term.

Steel

 

[MichaelB]

Well, Im not sure this is true. But even if it is, I saw just last week that we are in the top 5 states for overall taxes, and its no doubt it will get even higher over the next few year. I would leave the state, but DW is rooted here so strongly that thats not realistic in the near term.

Steel

While there is no uniform way to measure and compare tax rates among states, most sources I have seen put Illinois in the middle for individual income tax.

Edit: This link places Illinois at 13th at 10% vs the national average of 9.8% http://www.taxfoundation.org/taxdata/show/336.html

 

[Flsail]

but most public pensions were unsustainable anyway.

Steel

I don’t think it’s so much an issue of the public pensions themselves being unsustainable, as much as it is that the level of incompetence and greed on the part of the politicians, and in some cases labor, is unsustainable.
Not so long ago, many cities’ pensions were 90% - 100% funded and during the boom years these cities would contribute nothing to the funds as the increases on the investments more than covered their obligations. As things slowed, and the yearly audit showed that their pension obligations increased, in many cases they simply provided alternate actuarial reviews, with overly optimistic assumptions, to reduce or eliminate their required contributions. I think that started us on the slippery slope.
The employees, on the other hand, continued to contribute their percentage, in good times and bad.

 

[Steel Rain]

I don’t think it’s so much an issue of the public pensions themselves being unsustainable, as much as it is that the level of incompetence and greed on the part of the politicians, and in some cases labor, is unsustainable.
Not so long ago, many cities’ pensions were 90% - 100% funded and during the boom years these cities would contribute nothing to the funds as the increases on the investments more than covered their obligations. As things slowed, and the yearly audit showed that their pension obligations increased, in many cases they simply provided alternate actuarial reviews, with overly optimistic assumptions, to reduce or eliminate their required contributions. I think that started us on the slippery slope.
The employees, on the other hand, continued to contribute their percentage, in good times and bad.

I fully agree with this. This is particularly true in Illinois, the only question is who pays for this graft. I am reluctant to do so, not because I wish ill on the people who are impacted but simply because I did not mis manage it, did not vote for this nonsense and dont want to work longer to make it good. Having lived here for 16 years and 5 years in CA, I have reached the end of my rope on government graft.

Steel

 

[ERD50]

Hosed is right. Read the book "Retirement Heist" about how private companies legally drained pension funds, and then later cried that they were underfunded. ...

Very big difference - no comparison at all. Those private companies were still under the watch of the PBGC and paid their insurance premiums. They had to keep them funded to the levels the PBGC dictated, or terminate their plan. They can't terminate their plan w/o declaring bankruptcy (or maybe some other drastic measure). If the plan is terminated, the PBGC takes over and pensions were paid (up to the cap). No taxpayer dollars were used.

ERD50, I didn't hear the Union guy come up with any suggestions other than they just want to be part of the representation. A lot of his retort was about the pension holidays or missed payments by Springfield into the funds and how the employees made all their payments and the unfairness now for this to be solely on the backs of the employees.

Well, clearly it was unfair that the State did not make the contributions they were supposed to make. But I throw that back to the Union leaders - where were you guys when IL didn't make their payments? Were you calling for changes so that the pension system would remain viable? It seems clear that the Union leaders were not interested in IL paying either. Because that would have required raising taxes way back then, and that would have raised attention to just how expensive these pensions are, and taxpayers would question (like they are now) why are we paying for pensions that are in general more generous than private pensions? The Union leaders did not want those Qs coming up, and they knew we had the Constitutional requirement that earned pension benefits must be paid, so they were happy to sweep it under the rug, and kick the can down the road for the next guy. So I find it far too convenient for the Union guys to now say 'it wasn't our fault, don't ask us to pay'.

-ERD50

 

[youbet]

I did not mis manage it, did not vote for this nonsense and dont want to work longer to make it good.

I would expand that to say I don't want to be taxed beyond current levels to support any public pension, especially SS. If mismanaged programs, like the Illinois public pension system or, on a national level, SS, can't stand on their own as is, it's time to reduce benefits to the point where they are self-sustaining.

 

[ziggy29]

I would expand that to say I don't want to be taxed beyond current levels to support any public pension, especially SS. If mismanaged programs, like the Illinois public pension system or, on a national level, SS, can't stand on their own as is, it's time to reduce benefits to the point where they are self-sustaining.

I don't even think it's the level of funding so much as it is systemic problems with some plans. You can't allow spiking, promise benefits based on assumed investment returns of over 8% and give 90% of base pay for 30 years of service at age 50 and remain solvent through all foreseeable economic cycles. And you can't look at a good year in the stock market and say "we don't need to fund the pension plan this year".

 

[youbet]

I don't even think it's the level of funding so much as it is systemic problems with some plans. You can't allow spiking, promise benefits based on assumed investment returns of over 8% and give 90% of base pay for 30 years of service at age 50 and remain solvent through all foreseeable economic cycles. And you can't look at a good year in the stock market and say "we don't need to fund the pension plan this year".

Actually Zig, while spiking and other scams make great media headlines, the biggest problem in Illinois, by far, was the lack of funding. Yes, overly optimistic estimates of investment returns are part of the lack of funding issue, but remember that in Illinois the bottom line has been to not fund the system. That was consistent. The excuse not to fund varied from year to year, but the not funding part stayed the same. Whether the excuse was good investment returns, new actuarial tables, we can't afford it this year but we'll make it up next year, etc., etc., the consistent thing was failure to fund. And so be it. Today it is what it is.

I stayed up and read about the situation in Illinois late into the night last night. It turns out there is much, much more to the proposal than the players are putting out on the table for public review. This is not a surprise in Illinois politics. For example, switching to the new plan is proposed as being voluntary.......... Not switching will mean giving up subsidized retiree medical insurance but for many, say a teacher who has spousal coverage anyway, it won't matter. Or, once you hit 65, the Illinois retiree med plan is actually more expensive than Medicare plus a good supplement. Quinn says he expects only about 75% of the plan participants to switch. I imagine there are also some thoughts of a tie-in to ObamaCare since that source of med insurance would enable folks to be less concerned about giving up the Illinois retiree package. In fact, I'm wondering if the real savings aren't going to be from not providing retiree med insurance, or at least that will be an important part of it.

Another interesting tidbit mentioned but not emphasized is that the new plan shifts the cost of public pensions form the state to local taxing districts. Over several years, teacher and municipal pensions will be switched to being funded by local communities through higher property taxes. Only true state employees (less than one forth of the total) will be funded through the state income tax. While the state ledger will look more pleasing, home owners will find their property tax bills going up as the cost burden shifts from Springfield to Podunk, Ill. I was unable to find a proposed algorithm or time table for this "cost sharing." It will be a good thing to have the cost as part of property taxes as property taxes tend to get more scrutiny than income taxes. The shift in funding form state income tax to local property tax appears to be a pact between Rahm Emanuel and Pat Quinn and is related to the fact that Chicago already funds its public pensions through local property taxes. It's good news for Chicago residents and bad news for suburbanites and down-staters.

So....... there is much more to this than we're discussing here. It will be interesting to watch it unfold.

I'd suggest folks who actually have some vested interest in what's happening in Illinois do some googling and some reading. What we're discussing here is just general hogwash about pensions. If you or someone close is involved in Illinois, best to do some additional research as the devil is in the details.

 

[ziggy29]

Actually Zig, while spiking and other scams make great media headlines, the biggest problem in Illinois, by far, was the lack of funding. Yes, over optimistic estimates of investment returns are part of the lack of funding issue, but remember that in Illinois the bottom line has been to not fund the system. That was consistent. The excuse not to varied from year to year, but the not funding part stayed the same. Whether the excuse was good investment returns, new acturial tables, we can't afford it this year but we'll make it up next year, etc., etc., the consistent thing was fairlure to fund. And so be it. Today it is what it is.

Sure. But "media headlines" or not, it affects public opinion and the willingness to sacrifice more to shore it up. Same goes for taxes: even if certain "poster children" for waste and fraud are a very small part of the budget, people want them cleaned up before they're willing to spend another dollar in taxes.

There's an old saying (I say to my wife about my w*rk all the time) that goes something like, "failure to plan on your part does not constitute a crisis on my part." And so it is here.

 

[youbet]

Sure. But "media headlines" or not, it affects public opinion and the willingness to sacrifice more to shore it up. Same goes for taxes: even if certain "poster children" for waste and fraud are a very small part of the budget, people want them cleaned up before they're willing to spend another dollar in taxes.

There's an old saying (I say to my wife about my w*rk all the time) that goes something like, "failure to plan on your part does not constitute a crisis on my part." And so it is here.

No doubt you're correct Zig. I'm just talkin' 'bout the numbers, not the emotions.

But, you're right. I think the same thing happened in the private sector. With all the headlines and National Inquirer style articles about corporate executives making zillions, company jets, bonuses, etc., etc., it's no wonder the freezing/elimination/cancellation of private sector pension plans/401k matches and the like gets little sympathy except from those directly impacted.

Time to reign all these programs in. No more money to SS. No more money to public pensions. Absolutely no public subsidization (in any way, direct or indirect or through tax incentives) of private pensions or 401k style plans. I even question the tax deferred status of retirement savings plans. Why do it?

 

[ziggy29]

Time to reign all these programs in. No more money to SS. No more money to public pensions. Absolutely no public subsidization (in any way, direct or indirect) of private pensions or 401k style plans. I even question the tax deferred status of retirement savings plans. Why?

I would say that it's in the best interests of society for people to be able to retire in order to reduce the involuntary unemployment rate. Part of the unemployment problem is that many older folks who would have been retiring in decades past can't do it today, perhaps due to insufficient savings combined with a lack of pension and a need for Megacorp health insurance. Indeed, one of the publicly unstated goals of SS in the beginning was to free up jobs for the younger unemployed. This is also why I think it's folly to "fix" SS and Medicare by raising the eligibility age across the board. All that will do is throw a lot more people into the pool of jobseekers when there aren't enough jobs for the ones already in it.

 

[youbet]

I would say that it's in the best interests of society for people to be able to retire in order to reduce the involuntary unemployment rate. .

I suppose. But absolutely no need to tax youngsters to pay for geezers to sit at home drinking beer and watching the Cubs lose yet another one. SS is fine as it is and if funding isn't adequate to continue the current level of payments, lower the payments. Public pensions too high? Cut 'em. Private companies cancelling plans? It's their perogative.

I think the tone of this thread clearly points to the self-serving attitude of those who seek to pick fruit at the public orchard. Everyone wants to harvest from the most bountiful tree and contribute the least to the shared effort of maintaining the orchard. It's human nature I guess. We'll never equitably support all the possible ways to have folks not work. That's why DIY will be best over the long haul.

 

[Steel Rain]

No doubt you're correct Zig. I'm just talkin' 'bout the numbers, not the emotions.

But, you're right. I think the same thing happened in the private sector. With all the headlines and National Inquirer style articles about corporate executives making zillions, company jets, bonuses, etc., etc., it's no wonder the freezing/elimination/cancellation of private sector pension plans/401k matches and the like gets little sympathy except from those directly impacted.

Time to reign all these programs in. No more money to SS. No more money to public pensions. Absolutely no public subsidization (in any way, direct or indirect or through tax incentives) of private pensions or 401k style plans. I even question the tax deferred status of retirement savings plans. Why do it?

Wow, a fellow Libertarian I agree completely, once you start giving favored status to anthing or anyone, more will follow with the end result being the current abomination that is our tax code

Steel

 

[MichaelB]

One more request to keep this on topic please...

 

[ERD50]

One more request to keep this on topic please...

Can you be more specific please? I'm not sure which posts/comments you consider off topic. It all seems on-topic to me, I would not want to see the thread closed, but I'm not sure what is and what isn't concerning you.

-ERD50

 

[Bestwifeever]

Can you be more specific please? I'm not sure which posts/comments you consider off topic. It all seems on-topic to me, I would not want to see the thread closed, but I'm not sure what is and what isn't concerning you.

-ERD50

[mod hat on]See the post above MichaelB's. Mentioning political parties/affiliations often leads to political discussions and waking up porky.[/mod hat off]

 

[Steel Rain]

Sorry my bad, still learning the ropes.

Steel

 

[ripper1]

No doubt you're correct Zig. I'm just talkin' 'bout the numbers, not the emotions.

But, you're right. I think the same thing happened in the private sector. With all the headlines and National Inquirer style articles about corporate executives making zillions, company jets, bonuses, etc., etc., it's no wonder the freezing/elimination/cancellation of private sector pension plans/401k matches and the like gets little sympathy except from those directly impacted.

Time to reign all these programs in. No more money to SS. No more money to public pensions. Absolutely no public subsidization (in any way, direct or indirect or through tax incentives) of private pensions or 401k style plans. I even question the tax deferred status of retirement savings plans. Why do it?

All right now you are going a little too far here. Are you saying they should do away with traditional IRA'S? How else are people supposed to save for retirement than if they don't have pensions.

 

[jclarksnakes]

All right now you are going a little too far here. Are you saying they should do away with traditional IRA'S? How else are people supposed to save for retirement than if they don't have pensions.

People did actually save for retirement before there were IRAs. The idea of tax incentives for retirement saving does seem pretty compelling but the endless array of IRA permutations end up adding more complication to our already too complicated tax code.

 

[ripper1]

I suppose. But absolutely no need to tax youngsters to pay for geezers to sit at home drinking beer and watching the Cubs lose yet another one. SS is fine as it is and if funding isn't adequate to continue the current level of payments, lower the payments. Public pensions too high? Cut 'em. Private companies cancelling plans? It's their perogative.

I think the tone of this thread clearly points to the self-serving attitude of those who seek to pick fruit at the public orchard. Everyone wants to harvest from the most bountiful tree and contribute the least to the shared effort of maintaining the orchard. It's human nature I guess. We'll never equitably support all the possible ways to have folks not work. That's why DIY will be best over the long haul.

It is a little late for most older people to be DIY so things do need to be fixed but you can't just eliminate things and say thats it. Going forward I believe the younger generation will be the DIY.