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Fixing Pension Problems

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Vivian Moon View Drop Down
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    Posted: Dec 03 2013 at 12:06pm
Updated: 10:48 a.m. Tuesday, Dec. 3, 2013 | Posted: 10:48 a.m. Tuesday, Dec. 3, 2013

Ill. lawmakers taking up bill to fix pension mess

By KERRY LESTER

The Associated Press

SPRINGFIELD, Ill. —

Illinois lawmakers were poised Tuesday to vote on a plan to solve the state's $100 billion pension crisis — a proposal many are calling the most important vote of their careers and one that could deeply reduce the retirement benefits of hundreds of thousands of workers and retirees.

At a hearing on the measure Tuesday morning, House Speaker Michael Madigan called the pension shortfall — the worst of any state in the country — "one of the most serious problems affecting the state of Illinois."

"Change must be done," the Chicago Democrat said.

But public-employee labor unions called the plan unfair and unconstitutional and were continuing their efforts to kill it. Dan Montgomery, president of the Illinois Federation of Teachers, said it would severely cut the retirees' benefits and could only be described as "theft."

"How can you do this to the good people who serve our state?" Montgomery said.

Nine of the 10 members of a bipartisan pension conference committee signed off on the deal late Monday, sending it to the floors of both the House and Senate, where votes were expected later Tuesday. But passage in those Democrat-controlled chambers is not a sure bet. The committee's chairman, Sen. Kwame Raoul, said Senate President John Cullerton was still working to ensure "yes" votes Tuesday morning.

Illinois' unfunded pension liability was caused primarily by lawmakers who failed for decades to make the state's full payments to the funds.

Even as other states with similar pension messes took action in recent years, the General Assembly was unable to come up with its own solution. Meanwhile, the major credit rating agencies downgraded Illinois to the lowest credit rating of any state in the country, and annual pension payments grew to about one-fifth of the state's general funds budget, taking money away from schools, roads and other areas.

The pension proposal is estimated to save the state $160 billion over 30 years and fully fund the systems by 2044.

It would push back the retirement age for workers ages 45 and younger, on a sliding scale. The annual 3 percent cost-of-living increases for retirees would be replaced with a system that only provides the increases on a portion of benefits, based on how many years a beneficiary was in his or her job. Some workers would have the option of freezing their pension and starting a 401(k)-style defined contribution plan.

Also included in the plan is language to prevent "pension abuses," as nongovernment employees such as union bosses couldn't participate and new hires wouldn't be able to bank sick or vacation time to boost pensions.

Gov. Pat Quinn and other supporters on Monday stressed the importance of the vote, saying approving the legislation is a crucial step toward improving Illinois' disastrous financial situation. Quinn, a Chicago Democrat, planned to travel to the state Capitol and meet with as many legislators as possible to try to get them to vote yes.

"I think (this is) the most important fiscal vote that will ever be taken by the General Assembly in my lifetime," he said Monday at an unrelated event. "We need to erase the liability and move Illinois forward. That's what I'm committed to and I think everyone who is interested in the future of Illinois, the common good, what's good for taxpayers should join us in urging a yes vote."

Others have said the plan doesn't cut benefits enough, while some critics say legislators and the public haven't had sufficient time to review and analyze the legislation.

Tuesday's vote is scheduled to occur one day after the deadline for candidates to file with the state board of elections to run in the 2014 primary — timing that could give some lawmakers concerned about a primary challenge the freedom to vote in favor of the bill.

It's also a big vote politically for Quinn, who has made fixing the pension problem his top priority and is seeking another term next year. Just one of his three potential Republican challengers, Sen. Bill Brady, has said he supports the bill.

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VietVet View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote VietVet Quote  Post ReplyReply Direct Link To This Post Posted: Dec 03 2013 at 1:32pm
Ok, not a big fan of unions with greedy intentions at the bargainng table, nor ones who still insist on having it their way even though they have been shown a city is struggling to make legacy costs. However, how does one justify taking away a benefit, money or any other item in the worker/ employer relationship, especially if a worker has many years of service, has planned on acquiring a certain pension after decades of working and then suddenly has most of it taken away? Can't plan for any future that way can you? Furthermore, what has the worker been working for if they find out that a large portion of earned payouts doesn't count toward retirement? If an employer doesn't honor a contract are there legal issues to consider? ( of course, non-union employees don't have any rights nor contracts to consider)


Question for the lawmakers who will decide when and how much to take away from the working man here......

HOW MUCH IS BEING TAKEN AWAY FROM YOU (OR ARE YOU CONSIDERING GIVING UP)AS YOU DECIDE TO TAKE FROM THE WORKERS? WILL YOU LAWMAKERS SHARE IN THE MISERY AT THE STATE LEVEL BY REDUCING YOUR PENSION PAYOUT AND BENNIES? .......

DIDN'T THINK SO. IS IT ANY WONDER THAT POLITICIANS ARE LOOKED UPON WITH SUCH DISDAIN AND ARE THOUGHT TO BE LOWER IN THE PECKING ORDER THAN USED CAR SALESMEN?
I'm so proud of my hometown and what it has become. Recall 'em all. Let's start over.
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Stanky View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Stanky Quote  Post ReplyReply Direct Link To This Post Posted: Dec 03 2013 at 1:54pm
Vet, you know that any decrease in salary or benefits for the politician is largely for appearances sake. To say it would be a drop in the bucket of the total pension overhaul would be an understatement. How about reducing any of the bennies going to the retired politicians who did nothing about the problem for years? I'd support that.

As for changes for retirees seeming to be unfair, I don't think losing a COLA adjustment (3%??) is too big of a concern. But it's hard to know how much deeper the cuts go. With the entire global economy tanking and most of us suffering in one way or another, why should those who cry about their "fixed income" be immune from the fallout? For most of us, a "fixed income" would look pretty good in this day and age.
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spiderjohn View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote spiderjohn Quote  Post ReplyReply Direct Link To This Post Posted: Dec 03 2013 at 3:32pm
how about putting all politicians under their Affordable Care Act and Obamacare? And in to the Social Security system?

the under-funded pension systems out there is a sleeping Godzilla that pols don't want to discuss or reveal......

kinda like the Middietown public safety/city admin situation--
when there ain't no mo' money--there ain't no mo' money
Fed has propped up this economy throughout the Obama administration, and that end has to come fairly soon

doesn't matter what politicians say--just ask Dan Picard or Dora Bronston--how can they live up to their campaign promises that caused them to be elected.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote VietVet Quote  Post ReplyReply Direct Link To This Post Posted: Dec 03 2013 at 3:49pm
Originally posted by Stanky Stanky wrote:

Vet, you know that any decrease in salary or benefits for the politician is largely for appearances sake. To say it would be a drop in the bucket of the total pension overhaul would be an understatement. How about reducing any of the bennies going to the retired politicians who did nothing about the problem for years? I'd support that.

As for changes for retirees seeming to be unfair, I don't think losing a COLA adjustment (3%??) is too big of a concern. But it's hard to know how much deeper the cuts go. With the entire global economy tanking and most of us suffering in one way or another, why should those who cry about their "fixed income" be immune from the fallout? For most of us, a "fixed income" would look pretty good in this day and age.


A person works for 25-30 or 45 years and all this time, the company is putting in a certain percentage, based on a person's salary into a retirement fund. The employee is also offered a chance toward adding to that through payroll deduction of 5-10 and up to 15% of their weekly/biweekly pay to enhance the pot at the end of the retirement rainbow.

Now, after dealing with all the crap that accumulates over 40 years of working, the employee expects to see that pot when he walks out the door.

When said employee is told at the last minute, they are taking, say, 10 to 15% of that pot, I would imagine the employee is going to, at the very least, become irate and, at worst, get the gun out. Stealing from someone is stealing no matter how you slice it. Ya just don't do that to people and get away with it without some emotional reaction to follow. THAT is the problem with messing with a person who has put in their time, worked there a-- off to enjoy what little time they have before they die. This too, shall reach a pinnacle where enough shall be enough.
I'm so proud of my hometown and what it has become. Recall 'em all. Let's start over.
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spiderjohn View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote spiderjohn Quote  Post ReplyReply Direct Link To This Post Posted: Dec 03 2013 at 6:11pm
vet--it is no different than individual stock and retirement accounts

they take the money and hopefully invest it.
hopefully investing it in steady growth areas.
HOWEVER---govts.(more so than businesses)haven't invested the correct amounts required--they have "borrowed" it to use for "emergencies".
Problem being--the "emergencies" keep coming, and the money is never paid back and invested.

couple that with a few major blips in the market.....
the individual investors took a beating with their retirement $$--
the pension funds did equally poorly, + the theft and graft from poor supervision.

So---we now have major numerous pension funds under-funded to the point of being underwater and hopeless.

A major Ponzi scheme of using current contributions to pay the retirees instead of investing the $$ in to the future.

Hey individuals are responsible to manage their funds and if they take a hit--so be it. Sorry about yer luck.
Same for the pension funds. They were poorly managed and pilfered--so sorry about the future for the retirees. They trusted the wrong people.

Not happy about it or how it should be---but how it is.

Live with it

Whay say--lrisner?
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VietVet View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote VietVet Quote  Post ReplyReply Direct Link To This Post Posted: Dec 04 2013 at 6:32am
Spider, if that happens to me in another 4.5 years, after working 51 years, I will not "go quietly into the night".

P&G's retirement program seems to be "even keeled" over the years. My current employer seems to have their act together while investing in reasonable ventures, albeit a slow growth pace. There are employers out there who seem to manage retirement portfolios with conservative, lower risk, logical thinking. These employers have legacy costs too just like the local, state and fed governments. Don't see them robbing the legacy/retirement till to plow into research, new plants or other ventures like the public sector has done. If it can be done in the private sector, why are these government entities failing? The answer may be that the private sector companies watch their money expenditures a hell of a lot closer than the public sector who seems to use the old "tax 'em and keep the money in the pipeline while we throw the people's money around like there's no tomorrow. Reckless and irresponsible.

You make a bad decision and lose alot of the company's money in the private sector and someone's head usually rolls with the CEO as the executioner. But who's head rolls in the public sector if no one is held accountable for reckless spending? The only one policing the spending are the people but apathy gets in the way of demanding, in numbers, that someone be fired. Has there been a large contingent at council meetings or in Gilleland's office demanding an end to the spending nonsense going on in this city and a change in the budget priorities? How about a safeguard to keep from pilfering "hands off" budget items? Does anyone know how the city got into the position of not being set up correctly to handle retirement and legacy costs all these years? A little less money being spent on downtown buildings and pet projects and a little more in the basics is needed. Is this the way these people handle their own personal budgets? If so, bet they have alot of debt.
I'm so proud of my hometown and what it has become. Recall 'em all. Let's start over.
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spiderjohn View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote spiderjohn Quote  Post ReplyReply Direct Link To This Post Posted: Dec 04 2013 at 9:53am
Illinois?
Detroit?
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