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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 amount in the title of the blog post could be changed, the post dated 1971, and ditto marks used through 2017.
Illinois public sector pensions are a legislative and budget hellhole.
These types of pension plan changes are called a “soft freeze”, meaning future hires won’s be in the plan. But the problems right now and for the next 10-20 years are caused by current retirees and current employees and the pensions they’ve already earned. Massive unfunded accrued liabilities, essentially unaffordable to even get CLOSE to getting them funded. And soft-freeze has NO impact on the disaster that currently exists. None. The situation is so dire, that even a ‘hard freeze’ where actives earn no additional pension in future years and would only have their currently earned pension at the freeze… Read more »
A soft or hard freeze would impact the plans greatly because they reduce the incoming contributions that the pension systems require to stay theoretically afloat. That is the main reason why pensioners adamantly fight any sort of pension shift, not because they altruistically want current/future workers to have a well-funded retirement, but rather to protect their own withdrawals.
No, what I’m saying is that a soft-freeze that keeps the plan the same for EVERYONE covered by the plan now……….but prevents future hires from getting in………does VERY LITTLE to reduce costs. It would take 10,20 years to start reducing actual cash contribution requirements. So a soft freeze does not solve the crisis, not even close. Cash contribution requirements stay GINORMOUS and unaffordable for at least a decade, and by then it’s already game over. The current Liabilities keep growing because of all the current employees in their 30s, 40s, 50s. New hires in their 20s who would not get… Read more »
And the beat goes on and on and on. Look how fast we’re sinking under a republican governor. Imagine what things will look like under our next democrat governor.
We’re now on the back slope of the Laffer Curve and clearly in a death spiral. What will be the catalyst for final financial collapse? What will Illinois look like as it lurches into default? Like so many others, I hope to be long gone.
Can we get to tier zip. As in get out of the retirement business? 401k for all.