Phony budget savings of $500 million from pension change now fully exposed

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Mike
6 years ago

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.

Steve-Oh
6 years ago

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 »

nixit
6 years ago
Reply to  Steve-Oh

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.

Steve-Oh
6 years ago
Reply to  nixit

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 »

Erik
6 years ago

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.

Bross
6 years ago

Can we get to tier zip. As in get out of the retirement business? 401k for all.

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