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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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Just Curious. What amount would the buyout be for say a school superintendent? Also where does the money come from for the buyout? I don’t think it comes from the pension fund because that would decrease the funding levels if enough people took the buyout. Does it come from the general fund? If it does that takes money away appropriated to fund pensions. Not sure how it works. Can someone explain. Thanks.
That alternate pension income derives at present from the state selling bonds for that purpose. It does not come from the pension funds.
Thanks. I appreciate it.
Depends on the value of the pension. Title of job has nothing to do with it.
It doesn’t matter. All the money comes from the state anyway. That’s like asking which side of the pool should you drain.
The whole plan is based on paying people now (70% lump sum of COLA benefit they give up or 60% lump sum for inactive members), at a discounted rate, with the hope of overall savings.
Thanks.That makes sense. Most supers make north of $200K. One retired super here in Rockford makes about $185K per year. Your age at buyout would be a factor so if the super or anyone is 75 buyout would be less than if they 60 due to life expectancy tables. So it seems that buyouts are more targeted to those who are only a few years into retirement rather than those 20 years into retirement which makes sense. I’m not familiar with the pension buyout process so just trying to learn. Many variables.
So far the pension buyout system isn’t as flexible as your thoughts require. You have to make the decision upon your retirement and cannot do so years later, for example. Clearly it favors people who know their life span is likely to be less than average. Beyond that its pure speculation as to whether you will win or lose by taking the buyout. If you do, the worry factor is entirely on the pensioner as many would like. You may win, and you may lose. As always, “the stock market will vary” as is a long-standing saying. The state is… Read more »