-- Connecting the dots between our economy, government and business --
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 Illinois Policy Institute essay fails to point out that with the adoption of a 401k type plan, the already brittle Illinois pension plans will be further weakened as the contributions from active workers are no longer added to the pension plan and are instead deposited to the workers’ dedicated defined contribution account. This plan is half-baked until it is accompanied by actuarial analysis.
Firing all the Illinois state workers and rehiring them into a 401k type plan will not work because the plans’ accumulated deficits alone make them unaffordable and unsustainable. The 401k might well reduce the cost future state contributions and the risk of market volatility, but the current underfunding is too great to overcome. The unions also bear responsibility this mess. The state government made the pension promises but behind the shield of the 1970 Constitutional ammendment, the unions agreed to these promises that had only a remote chance of being fulfilled. Absent the benefit guarantees, would the unions and their… Read more »
you are right on all points.