– Bev Johns
NO ONE, not retired teachers, not current teachers, is better off if the Illinois House and Senate vote YES on Tuesday.
A retired teacher now receiving $50,000 in pension benefits (who taught for 30 years) will go from a COLA of $1,500 to $900 (a cut
of 40 percent). PLUS no State pension funds could be used to pay for part of healthcare.
A current teacher, while contributing one percent less than currently, could have to work 5 more years to get a full pension, AND could completely Lose their COLA for up to 5 years after they retire, AND no matter how much they make 20 or 30 years in the future would have their pension based on no more than $109,971 (adjusted by CPI).
SUMMARY OF PENSION CUTS SENT TO LEGISLATORS
“We hope to have legislative language sometime Monday, Dec. 2nd at which time we will forward it to you.”
What the pension bill means, what it will actually do, depends entirely on the precise wording of the legislation.
And we will not know those words until “sometime Monday” just before the votes on Tuesday.
————-
SUMMARY
* Annual annuity adjustment (COLAs): Future COLAs will be based on a retiree’s years of service and the CPI. The annual increase is equal to 3% of years of service multiplied by $1,000 ($800 for those coordinated with social security).
[If you worked for 30 years, you will receive a COLA increase of $900 – 3 percent of $30,000, unless you receive the reduced social security payment then you get a COLA of $720. You lose all the rest of your current COLA.]
The $1000/$800 will be adjusted each year by the CPI for everyone (retirees and current employees). [$1,000 will increase next year to about $1,015]
Those with an annuity that is less than their years of service times $1000/$800 (or whatever the amount is at the time of retirement) will receive a COLA equal to 3% compounded each year until their annuity reaches that amount.
* Funding schedule and method for certifying contributions: Establishes an actuarially sound funding schedule to achieve 100% funding no later than 2044. Contributions will be certified using the entry age normal actuarial cost method (EAN), which averages costs evenly over the pensioner’s employment and results in more level contributions.
* Supplemental contributions: The State will contribute (i) $364 million in FY19, (ii) $1 billion annually thereafter through 2045 or until the system reaches 100% funding, and (iii) 10% of the annual savings resulting from pension reform beginning in FY16 until the system reaches 100% funding. These contributions will be a “pure add on,” which means State contributions in any year will not be reduced by these amounts.
* Funding guarantee: If the State fails to make a pension payment or a supplemental contribution, a retirement system may file an action to compel the State to make the required pension payment and/or supplemental contribution.
* Employee contribution: Employees will contribute 1% less toward their pension.
* Staggered skips for annual adjustments: Current employees will miss annual adjustments depending on age: employees 50 or over miss 1 adjustment (year 2); 49-47 miss 3 adjustments (years 2, 4, and 6); 46-44 miss 4 adjustments (years 2, 4, 6, and 8); 43 and under miss 5 adjustments (years 2, 4, 6, 8, 10).
* Pensionable salary cap: Applies the Tier II salary cap ($109,971 for 2013), which is annually adjusted by the lesser of 3% or ? of the annual CPI-U. Salaries that currently exceed the cap or that will exceed the cap based on raises in a collective bargaining agreement would be grandfathered in.
* Retirement age: For those 45 years of age or under, the retirement age will be increased on a graduated scale. For each year a member is under 46, the retirement age will be increased by 4 months (up to 5 years).
* Effective rate of interest (ERI): The ERI for SURS and the rate of regular interest for TRS would be set to a value equivalent to 75 basis points above the interest paid by 30-year U.S. Treasury Bonds for all purposes.
* GARS Tier 2 fix: Changes the GARS Tier 2 salary cap and annual adjustment to bring it in line with all other Tier 2 benefits.
* Pension abuses: Prohibits future members of non-governmental organizations from participating in the systems and new hires from using sick or vacation time toward pensionable salary or years of service.
* Defined contribution plan: Up to 5% of Tier 1 active members have the option of joining a defined contribution plan. If a member chooses to opt into the defined contribution plan, benefits previously accrued in the defined benefit plan will be frozen.
* Collective bargaining: All pension matters, except pension pickups, are removed from collective bargaining.
* Healthcare payments: Prohibits the State pension systems from using pension funds to pay healthcare costs.
Fred Klonsky 
“no State pension funds
could be used to pay for part of healthcare”
What on earth does this mean? My husband is now paying 1 percent of his pension for a state Medicare supplement policy, a policy that was free before July 1. And the percentage is supposed to go to 2 percent next July. The amout paid for me, his dependent, also comes out of his pension. Does this mean the state will cancel these policies because they can’t take any pension money to pay for them?
I believe they are saying that the healthcare stipend would no longer be paid to retires as part of their pension and the full cost of healthcare will be responsibility of retirees. Emanuel has imposed this upon one group of pensioners in Chicago. Stipend will be gradually be eliminated within 3 years.
I don’t understand this part. Can you put it in different way? The example in particular throws me. Annual annuity adjustment (COLAs): Future COLAs will be based on a retiree’s years of service and the CPI. The annual increase is equal to 3% of years of service multiplied by $1,000 ($800 for those coordinated with social security).
[If you worked for 30 years, you will receive a COLA increase of $900 – 3 percent of $30,000, unless you receive the reduced social security payment then you get a COLA of $720. You lose all the rest of your current COLA.]
I retired from the State Police. Some of the men and women I worked with gave their lives for the citizens of the State of Illinois.
I sincerely hope someone had the decency to exclude having the COLA reduced on survivor benefits.
If Judges can be excluded, I would think the family members of those killed in the line of duty deserve the same.
Since retired teachers already lose one half of the Social Security benefits to which they are entitled because of the unfair Windfall Provision Act, I wonder what the rationale is for further punishing those same retirees by lowering the COLA adjustment for them to $800 and for everyone else to $1000. To paraphrase “Animal “Farm,” both adjustments are unfair, but one is more unfair than the other!
The health care provision means nothing; it is already the law. The Social Security language applies to those government pensions which are coordinated with Social Security such as SERS (State Employees Retirement System) not TRS. The cumulative effect of the annual increase changes are huge. For someone with 30 years and a pension of $50,000, it may be $600 in year 1; however, it would be 100,000’s of dollars over 20 years. See the analysis at Capitol Fax for more information.
This still can be defeated.
Right and this is why they want to curb the COLA.