Illinois Pension Reform

[Midpack]

But Stephen Hall, president of the Fort Worth Police Officers Association, called the proposed reductions excessive.

"I can't support changes to current employees. They were hired under a contract, a promise that these conditions would exist throughout their employment. Now the city is wanting to break that promise," he said.

From the article:
Is the bold-faced part really true? I certainly understand that these terms would be required to exist for the duration of a particular collective bargaining agreement and that benefits shouldn't be reduced for service already performed, but does the CBA really say anything about guaranteeing that future benefits for service not yet performed could NEVER have its formula changed? I have a hard time believing that. IF that is actually true and there is a "future benefits for work not yet performed can never be changed" clause in existing contracts, then I believe Mr. Hall has a valid point... and the city leaders who agreed to have such a clause in the contract should be fired.

I don't know if it's true in the case of Ft Worth or not, but the union coalition spokesman, Anders Lindall of AFSCME, on the WTTW 11 segment said pretty much the same thing though I don't know if he cited a contract obligation. You would expect the unions to take that position (not being snarky) as a negotiating position, just as those on the "other side" will take positions as far to the other extreme as possible (negotiating 101 to convincingly ask for more than you'd settle for). What matters is where they end up, hopefully a compromise that doesn't punish public employees or taxpayers excessively. There's room to sympathize with both...

 

[Chuckanut]

Obviously, the state of Illinoise should turn over its pension system to the collective wisdom of this group.

 

[GandK]

Theoretically, someday, I will get a pension. However... I'm in my 30s. Like most everyone else in my generation (X), I now have zero faith that anything "promised" will ever be mine (pension, Social Security, tax freedom of a Roth, etc.). In order for me to have ANY real financial security, I have to proceed from the assumption that, if I don't own it outright at present, it really isn't mine and may never be.

Which means... we are preparing for FIRE on multiple fronts, and without ever taking "promised benefits" into the equation. Living on one income and banking the other, maxing out every retirement account option, and having a big enough non-retirement account - and low enough household expenses - that if we had to, we could live solely on the interest of that one account. Its the only way to ensure our success in the face of such widespread systemic incompetence. Its also somewhat freeing to be putting multiple safety nets in place. That way we don't have to worry about other people's failure to save enough taking us down too.

As to paying taxes for benefits I will probably never receive... how is that different from any other tax, really? Does anyone here really feel as though the US government is a worthwhile purchase for the money we pay?

If I lived in Illinois, I would involve myself in the political process. Specifically, I would do everything I could to rein in government spending.

 

[MichaelB]

Interesting article (free) in The Bond Buyer yesterday (here Illinois Expects Strong Demand for GOs - The Bond Buyer Article). This is a magazine for investors in public financing. Illinois is selling some GO bonds, apparently part of the proceeds are to refinance current outstanding obligations with a better interest rate. Even though Illinois State finances are rated poorly compared with other states, they are still rated well when compared with other issuers of debt in the capital markets, such a corporations. The point here is that the pension issue is not so much financial as it is one of leadership and management.

Ahead of the sale, all three rating agencies affirmed Illinois’ GO ratings. The credit has benefited from an income tax hike last year that is expected to generate $6.5 billion annually, but is only temporary. The state is challenged by large pension obligations, rising Medicaid costs and $9 billion in unpaid bills. Its fiscal woes have resulted in higher borrowing costs.

Moody’s Investors Service earlier this year lowered its rating for Illinois one notch to A2 with a stable outlook. It is the lowest rated state by Moody’s. Fitch Ratings rates the state’s $27 billion of GOs A with a stable outlook and Standard & Poor’s rates it A-plus with a negative outlook. The GO pledge benefits from a priority claim on state revenues.

 

[Chuckanut]

Theoretically, someday, I will get a pension. However... I'm in my 30s. Like most everyone else in my generation (X), I now have zero faith that anything "promised" will ever be mine (pension, Social Security, tax freedom of a Roth, etc.). In order for me to have ANY real financial security, I have to proceed from the assumption that, if I don't own it outright at present, it really isn't mine and may never be.

I had the same feelings about 30 years ago when I was your age. I did not trust SS and pensions were a dream due to vesting restrictions. So, I saved and invested. FastForward to 2012 - I have my savings and investments which, on there own, will pay for the basics plus a little more. I also have SS and a modest pension which on their own will pay for the basics and a little more. Somehow the world did not end, and, by being extra cautious and not waisting my resources, I ended up OK.

So, to rephrase the Jesuits - Pray like it's all up to SS and pensions, Work like it's all up to you.

 

[Ron0731]

Madigan on raising retirement age

Illinois Speaker Madigan: Pension changes won't force public employees to work until age 67 | The Republic