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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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This article does not apply to Illinois state pensions, nor does it apply to most pensions in Illinois. The root of the problem is state legislators and governors hiked the legislatively set pension benefit levels, and the salaries were hiked, while the pensions were already underfunded, and that occurred since the very first salary and benefit hikes, because the state pensions have always been underfunded. The result is massive interest costs piled on the backs of taxpayers, resulting in more expensive pensions. Legislative benefit hikes should never occur to underfunded pensions. Think about it. Underfunded state pensions was a problem… Read more »
Here’s a March 6, 2017 article by MIchael Lucci, then with the Illinois Policy Institute, about the subject of state pension interest. The pension interest was $9B just for one year. No one has ever published the pension interest accrued on the state pension funds since 1971. That would be eye opening, especially when put into context with the legislative benefit hikes from 1971 – 2018. Here is a partial list of benefit hikes just for TRS. https://www.trsil.org/sites/default/files/documents/PUB26.pdf That list does not include SURS, SERS, JRS, & GARS (the other 4 “state” pensions). Once again, none of those benefit hikes… Read more »
Mike, on your question about how much is contributed towards principal versus interest, nothing is contributed to principal. Interest is not even being covered as it accrues. We’ve written about that often, and it’s true for both the state pensions and Chicago’s. Here’s our earlier article on how you can do a quick calculation of how much interest is left unpaid. https://wirepoints.org/illinois-pension-quicksand-a-quick-way-to-measure-it-wp-original/ Do that calculation now and you get something over $4 billion. That’s a key point we’ve tried to emphasize and it’s a big part of why unfunded liabilities just grow and grow. We also printed a guest piece… Read more »
Nothing has gone to principal since 1971?
Oh I see where I did wonder about principal vs interest for the $9B contribution.
My bad.
I don’t know exactly how far back it goes. At least 10 years, probably much, much more.
IL could cut pension packages in half, and the retirees would still be doing better than most in the country. As wirepoints said: over-promised, not under-funded.
The above is courtesy of “world with end.” These pensions and health care packages are unsustainable. That’s becoming more obvious as IL continues to lose population.
This is based on a national average being promoted by a lefty and does not apply to Illinois sickeningly rich pension packages for the public sector.
Pensions may have been underfunded but it is not the taxpayers who underfunded it. Just look at your property tax bills-higher every year. Money that was suppose to be allocated to pensions from your tax bill was “Diverted” to politicians pet projects or salaries increases. Every year you receive your tax bill there are pension payments either directly or are within the contracts like schools. Here in Rockford,Illinois there is pension pickup(100%) for teachers and is paid by taxpayers. When money is not appropriated to the designated fund and “Diverted” that is in my book “Theft By Deception” yet the… Read more »