-- 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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Not once have I seen a dollar to dollar comparison of what a person would get after 30 years of Social Security versus 30 years under a Tier 2 pension. I bet there is a reason for that.
Your argument implicitly suggests the two systems were designed with equal intentions. Not so! When the SS system was started in the 1930s it was meant to be part of a three-legged stool to support a retiree with maybe equivalent expectations for the other two legs of that stool, a private pension from privatpte work and personal savings. TRS and CTPF were meant as a replacement for SS and a private pension, thus they were designed to be more generous than SS from the outset.
Even if your post was true (It isn’t. Cite a source to back it up) you’re missing the point of the issue. Due to the Safe Harbor Laws enacted since, the benefits of the Tier 2 pensions are not supposed to be less than SS.
The argument is whether or not Tier 2 pensions actually violate safe harbor requirements for pension plans. Your 3 leg stool argument about original intent of SS, even if it is true, is irrelevant to the problem.
How about all new hires get a 401K and drop pensions, perfectly legal for new hires.
One obvious problem there is that the IL pension systems (TRS and CTPF) meant eventually for retirees are partially funded by all teachers to include any new teachers. Absent those employed teacher contributions the state and Chicago would be required to raise taxes for such purposes some other way, and your new plan would require more outside-source funding every year that passes. Chances are those new new-and-rising taxes would include you. Be careful what you wish for.
Bingo! It’s been a 401k in the real world since the early 80s. However, making this change apparently requires a constitutional change and democrats willing to scuttle their careers by bucking the public unions. Their personal interests are opposite what’s best for the state.
Moving all new employees to a 401k wouldn’t require a constitutional amendment. It would just require elected leaders that want to make that change.