Under funded pension plan tidal wave ...

rayinpenn said:
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?
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The State of Illinois is not rewriting the state constitution.
 
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-illinois/10-things-you-should-know_b_7772478.html



Sent from my iPad using Early Retirement Forum.
 
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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
 
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.
 
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.
 
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Bestwifeever said:
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.
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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).
 
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MichaelB said:
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.
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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 said:
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.
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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.
 
Bestwifeever said:
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.
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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.
 
rayinpenn said:
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.
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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.
 
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Bestwifeever said:
... 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.
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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
 
steelyman said:
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).
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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.
 
ERD50 said:
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
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Of course the State pension will be exempt. :mad:
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.
 
ripper1 said:
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.......
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The Detroit city pensioners also lost their health care, which was a significant hit for some of them.
 
 
Bestwifeever said:
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.
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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.
 
Sunset said:
Of course the State pension will be exempt. :mad:
.
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Really? I'm interested in this as it would have an impact at our house. Can you mention where you got this info?
 
ERD50 said:
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
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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.
 
rayinpenn said:
The point is will Detroit, Chicago etc. be able to restructure their debt and pay pennies on the dollar to pensioners? Scary stuff.
.
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I believe the answer for Detroit already exists. What do you think of the Detroit outcome?
 
steelyman said:
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.
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Remember, the poster you're commenting to stated what he "expects" to happen. Throwing in facts or data complicates things...........
 
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Taxing retirement income more or less has to happen, the state can't fix the budget issue with fees and sales tax increases alone. Given that the recent governor election was centered around the "temporary" income tax hike, expanding the taxable base is the best front forward.
 
travelover said:
The Detroit city pensioners also lost their health care, which was a significant hit for some of them.
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City of Chicago Retirees health care will also be eliminated by end of 2016. Not that it is a bargain anyway. I am paying almost 1400 dollars a month for premium for myself as an annuitant and spouse.
 
youbet said:
Really? I'm interested in this as it would have an impact at our house. Can you mention where you got this info?
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I don't see how if they start taxing retirement accounts that public employees would be exempt. That is absurd to me.
 
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