More State Pension Problems

[ERD50]

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Originally Posted by Sandman62 Substitute "Social Security" for "pension" and see how most people who expect half, 3/4 or more of their eventual SS benefits would be screaming. �� What if the federal government decided they'd rather not pay the people who paid into this their whole lives? Would that make the entire US population "naive"? �� Comparing state public pension raiding to private corp pensions isn't as relevant as comparing contracted state public annuities (pensions) to federal public annuities (SS).

I think if you read through this forum, you will find many here who are discounting their SS benefits. If not through direct cuts, through taxation changes that effectively reduce the benefits. And changes have been made during the years we made contributions.

And if you listen to the "Young Dreamers" seems like most of them aren't counting on SS at all, even though they (and their employers) pay into it today.

I'm not sure what it is about private pensions that makes them less relevant to the discussion?

-ERD50

[Chuckanut]

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Originally Posted by ERD50 What do you think of my "Occam's Razor" explanation a few posts back? I could be all wet of course, but it seems like the most plausible to me. Comments? -ERD50

Well it makes as much sense as many other explanations. Unions that sell-out/trick/misinform their members are not exactly unknown in this country.

Just a story from several years ago in my home state: The legislature, as usual, was struggling to balance the new state budget. One idea floated by a group of Dem and Repub representatives was to simply pay less than required into the public employee's pension funds for the next two years. Our governor at the time (a Democrat, FWIW) made it quite clear that that was not acceptable. Ultimately, they met the minimum requirements for funding.

Also, the "Golden" retirement plans were replaced way back in the 1970's. Of course, now zillions of baby boomers who worked under those plans are reaching retirement age. That particular plan has been adjusted at times over the years (often resulting in court battles) and is the least secure plan, though certainly not nearly as bad as Illinois.

Today, many of the newer folks get a hybrid DB/DC plan.
It's not all doom and gloom.

[youbet]

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Originally Posted by ERD50 Of course they "preferred" that their pension fund be properly funded. But what did they do about it when it wasn't being properly funded?

You continue to make it sound as though it's the teachers' fault Blagojevich et al either didn't fund or funded and then cooked the books by borrowing it back. Because Ms. Jimenez teaching English as a Second language in southern Illinois didn't head up to Springfield to punch Rod Baby over it, you say it's her own fault her pension will be gone? Aw, come on........ That's what I mean by "gleeful." You're really stretching it [mod edit]

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I'm just having trouble reconciling that this was allowed to happen (or at least they watched while it happened), and now these retirees are saying that it shouldn't be allowed to affect their pensions. That's a big disconnect for me. It seems like "magical thinking".

See my earlier post on this. Why are you so anxious to blame the victims?

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Now, if the Unions really had no power to force the State to make their contributions

If? What do you mean by "If"? Teacher organizations, unions, committees, etc., have no legislative authority. I think you have the misconception of all Illinois employees being in a single, powerful union which communicates information and calls to action to them and they all respond in lockstep. Sorry, it doesn't work that way, not in Illinois. Again, refer to my earlier post on this. Even the recent Illinois Supreme Court battle to keep their pensions failed to pull everyone together and only a last ditch effort and voluntary contributions got them a legal team to put on the case.

I have no issue with your thesis that the money just isn't there and therefore Illinois teachers should prepare for cuts or elimination of their pensions. But I so very strongly disagree with you that it is their own fault. I find them to be, with exceptions of course, a financially naive group of folks who accepted jobs with salaries and benefit packages and now find themselves being told a portion of those benefits will not be delivered. They naively paid their pension contribution every check and thought they'd be taken care of. I fault them for that. But I don't declare them guilty and the politicians innocent. Sorry..... Can't do that.

Before these folks get the boot in the butt from the state, we do need to have a very public bankruptcy-like legal proceeding. If the state says it can't put another penny into the pension funds but it is still paying for legislator junkets to Hawaii every February, we need to put that before the public. If putting additional funds into Mike Madigan's district as payola for votes to keep him in office continues, we need to put that before the public. Bankruptcy helped the retirees in Detroit and a similar Judicial supervised review could help here. As many posters have pointed out "Illinois taxes are high. Where's the money?" We need to find out and cut spending well into the bone before we tell Ms Jimenez (the English as a Second Language teacher from southern Illinois) that her punishment for not finding a way to get through Blagojevich's bodyguards is loss of her pension.

[youbet]

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Originally Posted by OldShooter With the latest IL court ruling that even pension benefits for new hires cannot be cut IMO it is a foregone conclusion that the IL constitution will be amended. There is no other way out.

I missed this earlier. It's typical of the misinformation going around. I wonder where you got it?

Illinois is completely free to change plans for new hires and has done so. New hires from 2011 on are on Tier II which requires the same employee contribution as Tier I but pays out much less and has a more frugal COLA formula than SS.

I haven't had a chance to study it yet, but there is also a more recent Tier III. It appears to be, on the surface, a tweak to keep the Feds from forcing them (Illinois) to put their employees on SS since Tier II is arguably inferior to SS. Having a pension plan equal to or better than SS is a requirement for states to opt their employees out of SS.

What Illinois cannot do (so far) is change the pension plans of incumbent teachers from the plan they were hired under. But new hires..... I don't think that's a problem. And they have hacked those folks back a bunch.

[Walt34]

Thanks everyone for an interesting discussion.

https://www.youtube.com/watch?v=gBzJGckMYO4