Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Under funded pension plan tidal wave ...
Old 07-19-2015, 05:44 AM   #1
Thinks s/he gets paid by the post
 
Join Date: May 2014
Posts: 1,185
Under funded pension plan tidal wave ...

Largest Public Pensions Face $2 Trillion Hole, Moodys Says - Bloomberg Business

If Illinois rewrites their constitution to legalize for municipal bankruptcies won't that open the floodgates? Further won't that crush the muni bond market?

I keep seeing these articles and I have to wonder when the tidal wave will hit land.


Sent from my iPad using Early Retirement Forum.
__________________

rayinpenn is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 07-19-2015, 06:01 AM   #2
Administrator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: Gone fishing
Posts: 25,778
Quote:
Originally Posted by rayinpenn View Post
If Illinois rewrites their constitution to legalize for municipal bankruptcies won't that open the floodgates? Further won't that crush the muni bond market?
The State of Illinois is not rewriting the state constitution.
__________________

MichaelB is offline   Reply With Quote
Under funded pension plan tidal wave ...
Old 07-19-2015, 06:16 AM   #3
Thinks s/he gets paid by the post
 
Join Date: May 2014
Posts: 1,185
Under funded pension plan tidal wave ...

Really? Please note the last sentence below. If budget passes the constitution will be modified and bankruptcies will be permitted...

The pension reform plan proposed by Governor Rauner could impact more than just public pensions. State and local public workers in Illinois would lose collective bargaining rights for pensions, wages, work hours and tenure through this single reform.

The plan, which Rauner announced Wednesday, contains significant pension reforms, but also contains other measures that Rauner has tried unsuccessfully to get through the legislature. A higher standard of proof for employee injury claims and bankruptcy eligibility for Illinois municipalities are among them.


http://www.huffingtonpost.com/reboot...b_7772478.html



Sent from my iPad using Early Retirement Forum.
rayinpenn is offline   Reply With Quote
Old 07-19-2015, 06:38 AM   #4
Thinks s/he gets paid by the post
steelyman's Avatar
 
Join Date: Feb 2011
Location: Triangle
Posts: 3,219
I am originally from Illinois and learned something from listening to a public radio talk program a while ago.

The topic of a constitutional convention appears once every 20 years on the general ballot. The last time was 2010. At that time, or at least the time the radio show aired, the big issue was recalling the governor (Blagojevich was in office). So the next scheduled year is 2030.

The Illinois Constitution is available online at http://ilga.gov
__________________

steelyman is offline   Reply With Quote
Old 07-19-2015, 06:44 AM   #5
Administrator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: Gone fishing
Posts: 25,778
I read the link. It is not an initiative to rewrite the state constitution. It appears to be a proposal by the Governor to change pensions and other things. It's not clear how it will be dealt with by the state legislature, this is part of a process that has been ongoing for some time.
MichaelB is offline   Reply With Quote
Old 07-19-2015, 07:54 AM   #6
Moderator Emeritus
Bestwifeever's Avatar
 
Join Date: Sep 2007
Posts: 16,562
I don't see the Illinois constitution mentioned in either of the news links in this thread (being an Illinois resident I read them both), but okay.... I am waiting for the Illinois powers that be to start taxing retirement income, currently not taxed--that was a surprise to us when we retired.
__________________
“Would you like an adventure now, or would you like to have your tea first?” J.M. Barrie, Peter Pan
Bestwifeever is offline   Reply With Quote
Under funded pension plan tidal wave ...
Old 07-19-2015, 08:01 AM   #7
Thinks s/he gets paid by the post
steelyman's Avatar
 
Join Date: Feb 2011
Location: Triangle
Posts: 3,219
Under funded pension plan tidal wave ...

Quote:
Originally Posted by Bestwifeever View Post
I don't see the Illinois constitution mentioned in either of the links in this thread (being an Illinois resident I read them both), but okay.... I am waiting for the Illinois powers that be to start taxing retirement income, currently not taxed--that was a surprise to us when we retired.

Yes, I saw something recently that said IL is one of only three states that do not tax retirement income (pensions, 401/403 plan withdrawals, etc.).

2015 is my last year to benefit from that (because I am no longer in IL).
__________________

steelyman is offline   Reply With Quote
Old 07-19-2015, 08:08 AM   #8
Thinks s/he gets paid by the post
 
Join Date: May 2014
Posts: 1,185
Quote:
Originally Posted by MichaelB View Post
I read the link. It is not an initiative to rewrite the state constitution. It appears to be a proposal by the Governor to change pensions and other things. It's not clear how it will be dealt with by the state legislature, this is part of a process that has been ongoing for some time.

The point is will Detroit, Chicago etc. be able to restructure their debt and pay pennies on the dollar to pensioners? Scary stuff.


Sent from my iPad using Early Retirement Forum.
rayinpenn is offline   Reply With Quote
Old 07-19-2015, 08:23 AM   #9
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 43,364
Sigh. This topic has been hashed, rehashed, and discussed repeatedly.

Your Pension Plan
Squeezy the Pension Python
Your State's Pension Liability
The Pension Problem
Illinois Teacher Pension Fund
Illinois Pension Reform
__________________
Numbers is hard

Although rare, it is possible to read something on this forum you don't agree with and simply move on with your life

Retired in 2005 at age 58, no pension
REWahoo is offline   Reply With Quote
Old 07-19-2015, 10:37 AM   #10
Full time employment: Posting here.
 
Join Date: Mar 2010
Location: Chicago
Posts: 909
Quote:
Originally Posted by rayinpenn View Post
The point is will Detroit, Chicago etc. be able to restructure their debt and pay pennies on the dollar to pensioners? Scary stuff.


Sent from my iPad using Early Retirement Forum.
Public safety workers in Detroit were made whole. The rest of the public employees took a 4% from principal haircut. The only thing they really lost was COLA. Stockton CA public workers also were made close to whole. So this bankruptcy thing for municipalities has not been able to cut to much from public employees.
ripper1 is offline   Reply With Quote
Old 07-19-2015, 10:44 AM   #11
Full time employment: Posting here.
 
Join Date: Mar 2010
Location: Chicago
Posts: 909
Quote:
Originally Posted by Bestwifeever View Post
I don't see the Illinois constitution mentioned in either of the news links in this thread (being an Illinois resident I read them both), but okay.... I am waiting for the Illinois powers that be to start taxing retirement income, currently not taxed--that was a surprise to us when we retired.
Well, the Illinois powers that be would be part of that equation so that won't fly. They are asking only peons (public employees) to foot the bill.
ripper1 is offline   Reply With Quote
Old 07-19-2015, 10:53 AM   #12
Full time employment: Posting here.
 
Join Date: Mar 2010
Location: Chicago
Posts: 909
Quote:
Originally Posted by rayinpenn View Post
Really? Please note the last sentence below. If budget passes the constitution will be modified and bankruptcies will be permitted...

The pension reform plan proposed by Governor Rauner could impact more than just public pensions. State and local public workers in Illinois would lose collective bargaining rights for pensions, wages, work hours and tenure through this single reform.

The plan, which Rauner announced Wednesday, contains significant pension reforms, but also contains other measures that Rauner has tried unsuccessfully to get through the legislature. A higher standard of proof for employee injury claims and bankruptcy eligibility for Illinois municipalities are among them.


10 Things You Should Know About Gov. Rauner's Pension Reform ProposalÂ*|Â*Reboot Illinois



Sent from my iPad using Early Retirement Forum.
The Illinois Supreme Court has already ruled that it is unconstitutional to diminish or impair state pensions. I don't know what part of the ruling this author doesn't understand.
ripper1 is offline   Reply With Quote
Old 07-19-2015, 11:31 AM   #13
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2005
Location: Northern IL
Posts: 18,881
Quote:
Originally Posted by Bestwifeever View Post
... but okay.... I am waiting for the Illinois powers that be to start taxing retirement income, currently not taxed--that was a surprise to us when we retired.
Taxing pension income (and SS?) is probably a reasonable step to increase revenues in IL (but what does 'reasonable' have to do with it? ), and I fully expect it will be attempted. Fine.

But I also expect that the IL State pensioners will protest this as 'diminishing' their pension benefits, which are guaranteed by the State constitution. It will be argued that taxing is separate from the benefits, but the end effect is the same, so the argument can be made.

Now what if they tax all pensions except State pensions?

-ERD50
ERD50 is offline   Reply With Quote
Old 07-19-2015, 11:54 AM   #14
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Sunset's Avatar
 
Join Date: Jul 2014
Location: Spending the Kids Inheritance and living in Chicago
Posts: 5,345
Quote:
Originally Posted by steelyman View Post
Yes, I saw something recently that said IL is one of only three states that do not tax retirement income (pensions, 401/403 plan withdrawals, etc.).

2015 is my last year to benefit from that (because I am no longer in IL).
You are forgetting there are 7 (i think) States that have no income tax, so by definition they also do not tax retirement income.

Its why FL is so popular.
Sunset is offline   Reply With Quote
Old 07-19-2015, 11:56 AM   #15
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Sunset's Avatar
 
Join Date: Jul 2014
Location: Spending the Kids Inheritance and living in Chicago
Posts: 5,345
Quote:
Originally Posted by ERD50 View Post
Taxing pension income (and SS?) is probably a reasonable step to increase revenues in IL (but what does 'reasonable' have to do with it? ), and I fully expect it will be attempted. Fine.

But I also expect that the IL State pensioners will protest this as 'diminishing' their pension benefits, which are guaranteed by the State constitution. It will be argued that taxing is separate from the benefits, but the end effect is the same, so the argument can be made.

Now what if they tax all pensions except State pensions?

-ERD50
Of course the State pension will be exempt.
Just like the IL State legislators passed a law last year that they get paid while the State has no budget (the other state workers do get shafted).
Position has its privilege.
Sunset is offline   Reply With Quote
Old 07-19-2015, 12:35 PM   #16
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
travelover's Avatar
 
Join Date: Mar 2007
Posts: 10,270
Quote:
Originally Posted by ripper1 View Post
Public safety workers in Detroit were made whole. The rest of the public employees took a 4% from principal haircut. The only thing they really lost was COLA.......
The Detroit city pensioners also lost their health care, which was a significant hit for some of them.
__________________
Yes, I have achieved work / life balance.
travelover is offline   Reply With Quote
Old 07-19-2015, 12:47 PM   #17
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2005
Posts: 13,850
Quote:
Originally Posted by REWahoo View Post

When has that every stopped us from doing it again
Texas Proud is offline   Reply With Quote
Old 07-19-2015, 12:52 PM   #18
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
youbet's Avatar
 
Join Date: Mar 2005
Location: Chicago
Posts: 10,055
Quote:
Originally Posted by Bestwifeever View Post
I am waiting for the Illinois powers that be to start taxing retirement income, currently not taxed--that was a surprise to us when we retired.
While planning retirement finances, I knew that Illinois wasn't going to tax my retirement income. But now, nine years into retirement, I'm finally realizing what an attractive situation this is for retirees. DW's pension = no state tax. My future MegaCorp pension = no state tax. My SS = no state tax. TIRA withdrawals = no state tax. Upcoming RMD's = no state tax. Roth conversions = no state tax. Etc.

I'm certainly not looking forward to anything that would change this situation, but sometimes it does seem too good to be true.
__________________
"I wasn't born blue blood. I was born blue-collar." John Wort Hannam
youbet is offline   Reply With Quote
Old 07-19-2015, 12:59 PM   #19
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
youbet's Avatar
 
Join Date: Mar 2005
Location: Chicago
Posts: 10,055
Quote:
Originally Posted by Sunset View Post
Of course the State pension will be exempt.
.
Really? I'm interested in this as it would have an impact at our house. Can you mention where you got this info?
__________________
"I wasn't born blue blood. I was born blue-collar." John Wort Hannam
youbet is offline   Reply With Quote
Old 07-19-2015, 12:59 PM   #20
Thinks s/he gets paid by the post
steelyman's Avatar
 
Join Date: Feb 2011
Location: Triangle
Posts: 3,219
Quote:
Originally Posted by ERD50 View Post
Taxing pension income (and SS?) is probably a reasonable step to increase revenues in IL (but what does 'reasonable' have to do with it? ), and I fully expect it will be attempted. Fine.



But I also expect that the IL State pensioners will protest this as 'diminishing' their pension benefits, which are guaranteed by the State constitution. It will be argued that taxing is separate from the benefits, but the end effect is the same, so the argument can be made.



Now what if they tax all pensions except State pensions?



-ERD50

Sigh is right.

One more time: taxing retirement income is tax policy, not a constitutional matter. Tax policy is not under what is referred to as the "impairment clause" in the IL Constitution.
__________________

__________________

steelyman is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Is this gonna cause an eclipse, or tidal wave or what? martyb Other topics 16 12-24-2010 08:43 PM
Under funded state pensions Leonidas FIRE and Money 73 04-15-2010 01:52 PM
New Wave of Alt-A Foreclosures to be Worse than Subprime Wave Retire Soon FIRE and Money 170 12-15-2008 09:31 PM

 

 
All times are GMT -6. The time now is 09:50 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2018, vBulletin Solutions, Inc.