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Summary and audio linked here.
Chicago’s political leadership is floating a pension buyout program as evidence it is seriously addressing the city’s thirty-six-billion-dollar unfunded pension liability, but Mark Glennon, founder of the Illinois policy research organization Wirepoints, said that the proposal moves debt from one column to another rather than reducing it, and that the broader fiscal picture facing the city continues to deteriorate across every measurable dimension. Audio here.
Expect no retraction or apology. This what they do.
The state’s existing buyout program for its own pensions is the precedent for Chicago, which should be a warning: Look out for similar exaggerated claims and shoddy analysis.
Full interview and summary linked here.
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The continued arguments over pensions
are a waste of time and energy.
Do nothing and sit back and enjoy the show,
Trump will not bail out Illinois or Chicago you
can make book on it. At this point it is a self fulfilling train wreck.
Focus on a particular city, like Peoria. The city manager there – just trying to do a tough job – sounds like PPF without the sturm and drang. He states repeatedly that they must cut services or raise taxes. The reality is that Peoria will have to do both, and in significant ways. Come 2028 100 percent of their general fund will go to pensions, and matters get worse thereafter. He like the rest of the administration looks to Springfield for a fix but they exist to stay in power – they won’t help. The focus here is often on… Read more »
Chicago Bankruptcy NOW!
No it will all be fine. PPF says that pensions will get paid first and he is right. That’s what the unions bought their politicians for. So no problem. If and when the money runs out the union owned political class of Illinois will just turn to their suppine slave class known as taxpayers and say pay up. And those poor spineless sub-creatures will submissively say thank you. May I keep some bread so I don’t starve. And if they leave you some crumbs, you will sing their praises and return them to office.
If the consequences of paying pensions first are police + teacher layoffs and more potholes and closed hospitals and homes abandoned for property tax delinquencies … then the public servants who govern us will be forced into rational priorities (no matter what bought judges say).
Not only Chicago but Illinois. Pensions are a form of economic cancer. They are killing the life blood of the honest taxpaying private sector worker. The funny part is the Public Sector still wants more, much more. The golden goose is almost dead.
Pensions generally are not “economic cancer”. ERISA pension plans provide consistent income and are required to be funded to cover their obligations. The pension is a good vehicle, if well managed, for providing income in retirement. Illinois is unique in the incestuous relationship between beneficiaries (unions) and elected officials. The officials accept money, phone banks, endorsements for their time in office and the unions expect fealty from the official. It’s an interesting question as to who is the master in these relationships and who is the servant. Federal legislation requiring public pensions to adopt ERISA standards would go a long… Read more »
The problem is defined benefit plans, not lack of ERISA standards.
The private sector mostly abandoned defined benefit plans years ago because they are unsustainable. In the 70s most private sector union members were covered by these plans; now the rate has dropped to only 15%. Most have switched to defined contribution plans.
No, they were abandoned when compensation limits were placed on highly compensated employees. When upper management’s pension opportunity became limited, that’s when they fell out of favor. There is no mystery about funding a sustainable pension fund and pensions do a better job for employee’s retirement security than other vehicles.
Of course pensions do a better job for employees retirement security than other vehicles.
A retirement vehicle that assigns all financial risk to the employer and none to the employee will always be more secure for the employee, and a huge risk for the employer. Until the employer is bankrupt.
MsT – your suggestions could have been helpful at one time, but Illinois pensions are so deep in the twilight zone they are largely irrelevant to the huge problem that exists. Don’t get me wrong – regulatory standards that incentivize sound behavior are a good idea. But Illinois is so deep in the muck the situation can only lead to concrete abject misery.
Illinois isn’t getting out of its pension debt so the only suggestion that matters is paying the actuarial contributions instead of continuing to borrow. Pay more now or pay more later. The voters either choose fiscal responsibility or they can pay more and bellyache about it on this site to feel better. Either way, Illinois pensions will be paid first.
You will not get my money or many of the other people’s money who reads this. Almost everyone will move out of Illinois sooner or later. The only way to get away from the excessive greed of the public sector is to leave the state.