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-   -   'Insane' even by Illinois standards? (https://www.early-retirement.org/forums/f27/insane-even-by-illinois-standards-58314.html)

KingB 10-12-2011 11:39 AM

'Insane' even by Illinois standards?
 
Quote:

A labor leader in Chicago is expected to receive pension payments of nearly $500,000 a year, while another could get about $438,000 a year...
$500,000 in pensions: 'Insane' even for Illinois? - US news - Life - msnbc.com

Quote:

"It's highly unlikely that the federal government would ever bail out a spend-thrift state. Therefore, Illinois needs to fix this on its own,"
And part of how to do this is by raising our property taxes. I recently received my tax bill and it went up by 12% - a $1K increase, this after our property values have gone down. Most of the tax are for the school district which don't get enough aid from the state.

ERD50 10-12-2011 12:33 PM

Yes, it is insane.

The insane part is, this guy worked for the city for years at a moderate salary. He retired, then worked for the union at a $240,000(!) annual salary. And it is that $240,000 that determines the pension he gets from the city(!?). Let the Union pay that pension if that's who gave him the salary - what it this insane tie-in between the Union and the city? Here's a little more info from linked articles:



1-day rehire nets $158,000 pension for ex-labor chief - US news - Life - msnbc.com

Quote:

Gannon, former president of the Chicago Federation of Labor, was able to take a long leave from a city job to work for a union and then receive a city pension based on a high union salary. That arrangement is allowed under a state law signed by Gov. Jim Thompson on his last day in office in 1991, according to an investigation by the Tribune and WGN-TV.
More at: One-day rehiring nets former Chicago labor leader a $158,000 city pension - chicagotribune.com

Sounds worthy of a protest, no? One with specific actionable items.

-ERD50

clifp 10-12-2011 12:42 PM

Quote:

Originally Posted by ERD50 (Post 1120548)
Yes, it is insane.


Sounds worthy of a protest, no? One with specific actionable items.

-ERD50

I predict in a few years we will see storied about Blago's pension as he organizes the prison workers and makes himself the head of the prison local.

I wonder if Rahm or President Obama's IL pension will be based on their White House salaries.

As far as protesting goes I am looking forward to the pictures ;D

Mulligan 10-12-2011 12:56 PM

Let's see.. Illinois well known financial problems, under funded pension systems, and it seems all the time there is released articles about extremely high pensions in state. I read last month an HS English teacher in Illinois had an almost $150,000 year pension. It doesn't take much imagination to see the possibility of the common pensioner (who I'm sure are the vast majority) who has a very modest pension to sustain themselves being the one holding the bag at the end. I have a pension and support pensions, but at some point there probably should be a max cap to protect the system, the common pensioner and also the taxpayer shouldn't there?

check6 10-12-2011 01:24 PM

My union had to reimburse the company 100% pay plus an additional 28% over ride to cover pension and medical when an employee did union work. I do not understand how these city governments allow this to happen.

Bimmerbill 10-12-2011 01:24 PM

I always shake my head when I read about stuff like this.
I just want in on the action.

Texas Proud 10-12-2011 01:28 PM

I hope this does not get to political, but IMO if there are any pensions out there where the final pension is not based on the average salary that they get from the gvmt it needs to be changed...


I remember in Houston a police chief got a big pension bump when the outgoing mayor gave him a big raise... there was a big stink about it, but the city counsel could not do anything about it in time.... all he needed was one paycheck and it was set...

I also find it amusing that these people can defend this with a straight face... like they deserve it....

ziggy29 10-12-2011 01:32 PM

Quote:

Originally Posted by Texas Proud (Post 1120574)
I hope this does not get to political, but IMO if there are any pensions out there where the final pension is not based on the average salary that they get from the gvmt it needs to be changed...

There is no question in my mind that loopholes like these need to be closed and the practice of "pension spiking" should be banned pretty much everywhere.

donheff 10-12-2011 01:42 PM

It is infuriating but your anger seems somewhat limited to me. The far great pension ripoff is the corporate pension plan ripoffs that destroyed well funded employee pension funds to the benefit of high level execs and CIOs. If you want to really drive yourself over the wall, read The Retirement Heist, How Companies Plunder and Profit from the Nest Eggs of American Workers, by Ellen Schultz. I read about it on another thread around here and got it from the library. It turns everything you thought was the case with "unfunded" employee pension funds upside down. The rapacious destruction of top corporate execs is horrifying. By contrast, this union ripoff almost seems trivial.

Texas Proud 10-12-2011 01:52 PM

Quote:

Originally Posted by donheff (Post 1120583)
It is infuriating but your anger seems somewhat limited to me. The far great pension ripoff is the corporate pension plan ripoffs that destroyed well funded employee pension funds to the benefit of high level execs and CIOs. If you want to really drive yourself over the wall, read The Retirement Heist, How Companies Plunder and Profit from the Nest Eggs of American Workers, by Ellen Schultz. I read about it on another thread around here and got it from the library. It turns everything you thought was the case with "unfunded" employee pension funds upside down. The rapacious destruction of top corporate execs is horrifying. By contrast, this union ripoff almost seems trivial.


Have not read the book... but I did know someone who worked for a company that did plunder a good number of pension plans... after awhile he decided to change jobs....

Back in the 80s, there were some companies that were bought just because their pension plan was so overfunded... the buying company could close it down, pay off the loans they took to buy the comapny and then sell what was left for a tidy sum....


But the other side of that coin is the employees were given everything they were promised.... and some got even more since if you were not vested you became 100% vested at the time they closed down a plan... sure, they were not getting the same going forward, but who said things do not change???

I am sure there are a few people who see that the state is going to try and change the law and are hoping they can cash out before it happens...

MichaelB 10-12-2011 01:54 PM

All pensions - public, corporate, union alike have been subject to abuse and bad behaviour by "the few". It is shameful how some people exploit others and how they are helped in that task by those that should be protecting, not enabling.

The real damage is not the abuse by the few but the pension loss that so many suffer. Most people receiving corporate, union or public pensions get very little, earned fairly what they get, and are portrayed harshly as a result of this abuse.

ziggy29 10-12-2011 01:59 PM

Quote:

Originally Posted by MichaelB (Post 1120590)
All pensions - public, corporate, union alike have been subject to abuse and bad behaviour by "the few". It is shameful how some people exploit others and how they are helped in that task by those that should be protecting, not enabling.

The real damage is not the abuse by the few but the pension loss that so many suffer. Most people receiving corporate, union or public pensions get very little, earned fairly what they get, and are portrayed harshly as a result of this abuse.

Not only that -- it's not about pensions and unions per se but that there are abuses and loopholes that are the real problem but are all too often (IMO) used as ammunition against the concepts entirely.

What I find egregious in this case is that not only is the taxpayer getting skewered, but in a sense the "rank and file" in these unions is getting victimized twice -- once by the guy who was supposed to be looking out for them but made their pension fund less solvent, and again by a public who will often scapegoat all pensioners because of the abuse of a few.

FIREd 10-12-2011 02:08 PM

I am usually pretty indifferent to the pension debate, but this is truly insane.

Bestwifeever 10-12-2011 02:22 PM

I think the disconnect between the employing body and the pensioning body is key.

The "3-or-5-or-whateverr-highest-year average X whatever variable = pension" led to the employing body granting big raises in the last three years (because the pension law didn't say they couldn't) or the employees boosting their own salary with personal funds to achieve a higher average (because the pension law didn't say they couldn't). All tidy and legal, but against the spirit of the law if there is such a thing. Had the employing bodies been managing their own pension funds, perhaps there would have been a sense of fiscal responsibility and accountability in the end-career raises or the personal spiking.

samclem 10-12-2011 02:33 PM

Quote:

Originally Posted by donheff (Post 1120583)
. . . The far great pension ripoff is the corporate pension plan ripoffs that destroyed well funded employee pension funds to the benefit of high level execs and CIOs.

"Yabut", the big difference is in who pays. If a private corporation wants to plunder their pension plans, that's not a public issue (unless it gets to the point that the PBGC gets involved). This Illinois situation looks like some type of unholy union/govt alliance whereby a person can legally raid the government pension fund. If the union wants to have a corrupt system, that's between the leadership and the members. But who represents the taxpayers of Illinois when these decisions are being made? The same pol who just won an election courtesy of union support? It stinks.

Mulligan 10-12-2011 03:01 PM

Quote:

Originally Posted by Bestwifeever
I think the disconnect between the employing body and the pensioning body is key.

The "3-or-5-or-whateverr-highest-year average X whatever variable = pension" led to the employing body granting big raises in the last three years (because the pension law didn't say they couldn't) or the employees boosting their own salary with personal funds to achieve a higher average (because the pension law didn't say they couldn't). All tidy and legal, but against the spirit of the law if there is such a thing. Had the employing bodies been managing their own pension funds, perhaps there would have been a sense of fiscal responsibility and accountability in the end-career raises or the personal spiking.

While I am not knowledgable enough to determine what percent of a pension fund is effected by this, I agree this certainly is a problem. The employing body can spike the salary to get them to stay on longer. That cost is short term. The pension body which generally can't set any laws is the entity that is stuck long term with the payout problem. Our system just recently capped a maximum 10% yearly increase in final years to tone this down, so it must have been a problem. A 10% yearly cap increase for same position pay in public work still seems very generous and still open to a little abuse, though.
On a humorous side note, yesterday a friend of mine who is a school superintendent told me he asked an older teacher who started her career later in years if she was going to attend the retirement informational meeting. She said she said she only had 7 years in and wasn't close enough to benefit from it. He asked her that he thought she had taught longer than that. She replied- Well I have taught 12, but the first 5 don't count because those are the vesting years. Sounded to me she should have been the first in line to learn about her retirement!

Leonidas 10-12-2011 03:24 PM

Quote:

Originally Posted by Mulligan (Post 1120621)
The employing body can spike the salary to get them to stay on longer. That cost is short term. The pension body which generally can't set any laws is the entity that is stuck long term with the payout problem.

And it's not just a case of spiking salaries to keep experienced employees on the job, but the governmental employers frequently have tried to weasel their way out of agreed upon obligations to the pension systems.

My system started working with the employer in the 1990's, when we were 100% funded, to address anticipated future funding issues. The city pleaded poverty and got the pension system to agree to allow them to gradually increase to the new contribution rate over a 6-year period. While the ink on that agreement was still wet, the city gave the union a contract that threatened to bankrupt the pension. Then the city claimed it couldn't pay its already too-small contribution and played hardball trying to reduce the already too-small amount they were paying into the system.

It was a case of playing the pension system against the employee's union to underfund everything and keep a steady level of employees without the expense of hiring new ones in a good economy. Eventually the union supported the pension board's lawsuit against the city to force it to comply, but it was ugly for a while.

donheff 10-12-2011 05:53 PM

Quote:

Originally Posted by Texas Proud (Post 1120588)

But the other side of that coin is the employees were given everything they were promised.... and some got even more since if you were not vested you became 100% vested at the time they closed down a plan... sure, they were not getting the same going forward, but who said things do not change???

Not really. The companies took an "over funded plan" (i.e. one that could effectively pay what was expected by its participants) add in a pile of unfunded executive pensions and then close out the whole lot. The employees got what they had already earned --- way, way different than what they expected since they were approaching high earning years and high multiple pension calculation periods. The companies got to capture the "over funding" as earnings and got to capture take the immense liabilities that would now never be realized as earnings. And, guess what. They got to blame the employees and the unions because pensions were supposedly a problem.

donheff 10-12-2011 06:10 PM

Quote:

Originally Posted by Bestwifeever (Post 1120606)
I think the disconnect between the employing body and the pensioning body is key.

The "3-or-5-or-whateverr-highest-year average X whatever variable = pension" led to the employing body granting big raises in the last three years (because the pension law didn't say they couldn't) or the employees boosting their own salary with personal funds to achieve a higher average (because the pension law didn't say they couldn't). All tidy and legal, but against the spirit of the law if there is such a thing. Had the employing bodies been managing their own pension funds, perhaps there would have been a sense of fiscal responsibility and accountability in the end-career raises or the personal spiking.

I was blown away to discover how this ruse worked too. Raiders bought companies with good pension plans for the rank and file. Then they moved mid managers and execs (with vast unfunded liabilities) into the "over funded" rank and file plans. Then they offered the mid managers and execs "double nickles" (5 years service, 5 years age) to retire (which they could do because the fund was "over funded" so the $ was available for such buyouts). After the downsizing they froze the pension plan and captured the suddenly reduced liabilities as income (which could be dribbled onto the books quarter after quarter to meet 'expectations"). Then they slashed promised life time retiree health benefits because it was cheaper to litigate than pay (ERISA doesn't permit damages). Or they slowly cut health on the argument that they were in financial trouble tricking the unions into letting it go by (past practice) after which they slashed benefits to nothing. Then they packaged up the devastated divisions (including the empty pension fund) into a subsidiary. Then the subsidiary went bankrupt and gave the CEO a $45M package.

There is a whole consulting industry available to show corporate execs how to play the system so they can remain "legal" or close enough to legal to profit from these despicable practices.

donheff 10-12-2011 06:21 PM

Apologies for my ranting. If you haven't figured it out, Retirement Heist pissed me off about corporate greed more than anything I have previously read. And I have read all of the recent books on how Wall Street took down America. How these management dogs ripped of American workers is so despicable I am amazed some of the private sector people who were devastated by these practices didn't bring their guns into headquarters.

I am sure there is at least some modicum of a story on the other side. I welcome the more cool headed on the forum to read this book and then inform me of how it is not accurate. In the meantime, I am ready to "occupy" something. >:(


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