The JouralStar reported yesterday that the new Tier 3 pension plan can’t be implemented before next fiscal year for TRS, the state teacher’s pension which represents over 60% of the state pension system. Tier 3 is for newly hired workers in TRS and SURS and for their Tier 2 workers who opt in.
But the article didn’t connect the dots and missed the real impact.
The new state budget, recently passed along with the Tier 3 changes, assumed $500 million dollars in savings from the change this year. That clearly won’t happen (though some minor changes may be realized if SURS can implement the changes this year).
The Better Government Association wrote a piece a couple weeks ago questioning whether the savings would materialize, and we wrote about that in our earlier quicktake: “Oh, come on. The budget with the Tier 3 changes was passed six days after the new fiscal year had already started. It takes no pension expert to know that complex changes can’t be implemented immediately.”
The biggest lesson here is one you should already know: Don’t believe anything about savings from a pension reform proposal until some credible professional analyzes and scores it.
Blame both Rauner and the General Assembly for the lie.
And don’t expect the changes to save $500 million next year, either. We need more data to say for sure but that, too, looks grossly inflated to me.
–Mark Glennon is founder of Wirepoints. Opinions expressed are his own.