Pension and education blogger Glen Brown.
I was thinking that some time ago you did a comparison piece of defined pensions vs. 401K’s. Given what Rauner is saying in the Chicago. Tribune, 401′s are the way he wants to go.
To make a short story long, on a FB thread of a friends, one of HIS friends is saying that 401′s are okey dokey with him because he was financially savvy enough to place enough of his money into the deferred comp plan. He also states, in a nutshell, that he got his so boo hoo for the rest.
Before I reply to this bozo, I must (1) bite my tongue and (2) wanted to be able to send on that older article of yours. Whenever you can help me out is fine……I just couldn’t find it in the archives. TY!
- Help me out.
Here is a column by my friend Glen Brown that compares defined benefit plans and defined contribution plans:
Defined-Benefit Pension Plan:
Your defined-benefit pension plan is more cost efficient than the defined-contribution savings plan
Your defined-benefit pension plan offers predictable, guaranteed monthly benefits for life
Funds are invested by professional asset managers in a diversified portfolio that follows long-term investment strategies
The large-pooled assets reduce asset management and miscellaneous fees
Your defined-benefit pension plan provides spousal (survivor) financial benefits
Your defined-benefit pension plan provides disability benefits
The state is responsible for funding, investment, inflationary and longevity risks
Your defined-benefit pension plan is a more effective protection than the defined-contribution savings plan
Your defined-benefit pension plan provides you with self-sufficiency in retirement; it is associated with far fewer households that experience food privation, shelter adversity and health care hardship
Your defined-benefit pension plan is less expensive for taxpayers than Social Security – a reason why legislators, et al had negotiated for Illinois teachers to not pay into Social Security
Your defined-benefit pension plan has an economic impact of over $4 billion on Illinois; the effect on Gross Domestic Product is $2.38 billion; jobs that are created: 30,448 (Teachers Retirement System of Illinois, TRS)
The Teachers Retirement System of Illinois is the 39th largest in the U.S. with 378,288 members (TRS)
The average investment returns for TRS: 9.3% (over 30 years), 8.8% (over 25 years), 8.3% (over 20 years) (TRS)
Defined-benefit pension plans contribute over $100 billion to annual local, state, and federal revenue in the U.S. and provide capital to financial markets (National Institute on Retirement Security, NIRS)
Defined-Contribution Savings Plan:
With a defined-contribution savings plan (401k, 403b, 457), only your contributions are defined
A defined-contribution savings plan shifts all the responsibilities and all of the risk from the employer to you (unless negotiated otherwise); thus, your benefit is not guaranteed for life
Your benefit is based upon individual investment earnings
You assume all funding, investment, inflationary and longevity risks
A defined-contribution savings plan does not have the pooled investments, professional asset managers, and shared administrative costs that a defined-benefit pension plan provides
There are no survivor or disability benefits and guarantees
Though you bear no portability risks, accounts are not always rolled over when you change jobs
Your employer (state) will have to bear the administrative costs of both defined-benefit pension and defined-contribution savings plans when you switch over
Though not your problem, “payments to amortize unfunded liabilities for the defined-benefit pension plan may be accelerated” (NIRS)
The Governmental Accounting Standards Board “requires [an] acceleration of unfunded liability payments when the defined-benefit pension plan is closed to be recognized on financial statements” (NIRS)
When changing from a defined-benefit pension plan to a defined-contribution savings plan, “new members do not start with any unfunded obligation” (NIRS)
“Projected defined-benefit savings contributions for new members are worth more than the projected defined-benefit pension costs for those members” (NIRS)
“No unfunded obligations [liabilities] for existing members are reduced when new members go into a defined-contribution savings plan” (NIRS)
“The loss of new members make it difficult to finance the unfunded obligations of the defined-benefit pension plan” (NIRS)
Sources: the National Institute on Retirement Security (NIRS), the Teachers Retirement System of Illinois
Jay Travis is running for the Illinois House in the 26th District.
Daylight savings time means it is dark at 7AM as I head out the door.
I won’t be doing much posting today since I will be at the Area II meeting of the Illinois Retired Teachers Association. I’m speaking along with IRTA President Bob Pinkerton, IRTA Executive Director Jim Bachman and Bob Lyons, the Annuitant Trustee of the Teacher Retirement System.
Bob is the new President of IRTA and we haven’t met. Jim and Bob I know. I owe a dollar to each of them on a bet we made back in the Fall about whether the Illinois General Assembly would pass Senate Bill 1.
I won’t say who bet what.
I have several other retiree meetings this week. And tomorrow night I will be taking part in the poll watching training for Will Guzzardi – although I have done enough election day poll watching over the years to kind of know what is what. But each campaign does it differently.
The important thing is not to let the Machine steal on election day what they haven’t been able to do in the campaign.
Because of the training session I can’t attend Jay Travis’ meeting on retirement security. Jay is running in the 26th District against Michael Madigan’s favorite, Christian Mitchell.
Join us for a forum on retirement security on Tuesday, March 11, 2014, from 5:00 p.m. to 7:00 p.m. at Kennicott Park located at 4434 South Lake Park Avenue, Chicago, IL 60653. Doors open at 4:00 p.m.
Last December state representative, Christian Mitchell, voted along with other politicians to dramatically slash the retirement life savings of thousands of seniors and working people throughout the state. We believe that they may well take the same position when it comes to the retirement security of our neighbors—thousands of Chicagoans who serve our communities as nurses, cafeteria workers, teachers, teachers’ aides, firefighters, librarians, and police officers, for example. The economic impact of these cuts would devastate the local economy and community.
We have invited state representatives and senators as well as 26th House District challenger Jay Travis to the forum as well as lawmakers and legislative candidates from throughout the area so that you and fellow residents can engage them on the issue of retirement security.
Twelve powerful images of women in the labor movement.
PBS is still hiding their cozy financial dealings with the pension thieves.
Ex-guerrilla favorite to win El Salvador’s presidential election.
Billionaires are bullying teachers in California.
Five bad ideas about education.
I’ll call this teacher Coffy—in honor of the lead character from that epic Pam Grier flick, which I happened to see yet again just last week. ‘Cause only a badass like Coffy would have the guts to blow the whistle on such bullshit.
As Coffy explained, it was a consulting class put together by the Office of Strategic School Support Services—or OS4, as it’s lovingly nicknamed. It’s a central office entity created by Mayor Emanuel even as he was supposedly cutting central office spending to the bone.
In this case, CPS paid grammar school teachers about $20 an hour to attend four hours of professional development training on how to lead test prep sessions for the ISAT. I’m sure the consultant made much more than that.
Essentially, the consultant is teaching the teachers what they will eventually teach their kids.
“I think most of the teachers were going along and repeating what the consultant said out of politeness,” says Coffy. “But I didn’t repeat it. I’m not much of a person for repeating things like that.”
At one point, Coffy surreptitiously took out her cell phone and recorded about two or three minutes. “I couldn’t believe what was going on. I thought—people have to see this.”
Coffy posted the tape on YouTube on February 4, and it’s drawn almost 200,000 hits. Here, watch it yourself.
Think of it as education—Mayor Emanuel style. Ben Joravsky
It is primarily women who will be hurt by Senate Bill 1. Photo: Fred Klonsky
Aunt Mary – who was not my actual aunt – grabbed the live lake perch out of my hand and said, “You do it like this.” Aunt Mary proceeded to smack the fish’s head against a tree.
My brother-in-law and I had been out on Lake Champlain off the Adirondack camp his family owned. We had spent the day fishing by Split Rock. Which, as far as I could tell was an excuse to go through a case of beer.
I did, however, land a few lake perch.
“That’s how you kill it,” Aunt Mary lectured me.
“Now you can go gut and scale it,” sounding more like a drill sergeant than the slight elderly lady who stood before me.
I am pretty sure that Aunt Mary would have described me as a sissy. Her word. Not mine. I had no experience fishing lake perch. In fact my only fishing experience was as a nine-year old with my professionally unemployed actual Uncle Al.
A word about my Uncle Al.
He was a large Hawaiian shirt-wearing guy who was married to his long-suffering wife, Aunt Frances. Having no children of their own, Uncle Al took pleasure in terrifying his young nephews and nieces. The youngest of us would break into tears at the very sight of him walking into the room we were in.
On the other hand, Uncle Al and Aunt Frances were the ones who took me to Disneyland when our family first moved to Los Angeles from Philadelphia.
And Uncle Al took me to go fishing on a barge off the coast of Southern California. My first fishing experience.
My only catch of the day was a mackerel.
I was terribly excited. At which point Uncle Al took the 8 inch fish off the hook and threw it back in the water, grumbling, “garbage fish.”
I was horrified. And, of course, broke in to tears.
Back when Aunt Mary was showing me how to kill lake perch, Anne was working in a male-dominated private sector industry and I was teaching in the female-dominated elementary school industry.
Our different careers only served to secure Aunt Mary’s suspicions of me and she was even further unimpressed by the fact that I was the one who was going to cook the perch and serve it with the apple pies I had baked.
Aunt Mary came from a generation where men brought home the bacon and the women cooked it up.
About the female-dominated elementary school industry: Male privilege ends with a K-5 teacher’s paycheck. It works like this: The younger the age of the kids you work with the lower your pay because it is more likely that you will see women doing the work.
In my old district the board of education was made up of mostly men, the superintendents over the years were mostly men and the principals were mostly men.
In Park Ridge, where I taught for 30 years, there are two school districts. There is a K-8 district and a high school district. There are two collective bargaining agreements. Same town. Same families. Same tax base. Guess which teaching job paid more? The K-8 district or the high school district?
This gets us to the pension issue.
You didn’t think I was going to ignore the pension issue, did you?
Which gender is primarily getting smacked by the loss of our post retirement benefits as a result of Senate Bill 1?
And in Chicago, it is primarily African-American women who will be hurt by Rahm Emanuel’s plan to cut post retirement benefits. While the percentage of African-American teachers in CPS has dramatically dropped over the past twenty years from nearly 60% to barely 20%, a huge percentage of retired Chicago teachers are African-American women. Back in the day, public school teaching was one of the few professional fields African-American women were permitted to work in.
As the Chicago Teachers Union points out:
Retirees living in the city’s majority-black zip codes earn more than $600 million in annual pension incomes from the four public funds. The African-American middle class in Chicago will be the hardest hit by reductions in retirement benefits.
I write all this because today is International Women’s Day. It has been celebrated in Chicago since 1908.
It’s not the only day I think about my Grandmother Esther Wainer and Helen Klonsky, my mom. Both strong, independent and politically active women. And the rest of my family – mostly women – Anne, my daughters, daughter-in-law and granddaughter. Powerhouses. Each and every one.
And I send a heart-felt shout out to my colleagues and retirees.
Running for her political life, Toni Berrios is trying to to recreate herself into a progressive.
But with a 12 year record to run on, that is hard to do.
Twelve years of pension underfunding. Twelve years of voting for pension theft.
Twelve years of bowing to her patrons, Mike Madigan and Big Daddy Berrios.
Back in November my wife Anne wrote Representative concerning SB1342. It was a bill that would require mandatory sentencing and add an estimated 4,000 people to the state’s enormous prison population.
Anne wrote to her State Representative to express her opposition to the bill.
Please stand strong against new mandatory minimums, because mandatory minimums do not deter gun violence. SB1342 would increase the penalty for unlawful use of a weapon to 3 years. This new mandatory minimum would only serve to crowd our prisons and drive up our budgets without increasing public safety.
The Illinois Department of Corrections estimates that SB1342 will add nearly 4,000 inmates to the already-swollen prison population at a cost of nearly 1 billion dollars over 10 years. Yet mandatory minimums have not proven effective. When Florida enacted a 3 year mandatory minimum sentence for certain gun crimes, a study published in the Journal of Criminal Law and Crimonology found that it “did not have a measurable deterrent effect on violent crime.”
Other states have been realized that mandatory minimums are the wrong way to go. Pennsylvania State Senator Stewart Greenleaf, Republican Chair of the Senate Judiciary Committee, recently opposed a proposed two-year mandatory minimum sentence for anyone convicted of illegally possessing a firearm in Philadelphia: “I introduced most of the mandatory sentences in Pennsylvania over the years. We thought we would get really tough on crime, and reduce violent crime and have lower recidivism and things like that. Well, just the opposite happened . . . All we did was fill our prisons up and violent crime continued to go up.”
This bill would be a huge step backward for Illinois. Please stand strong against any new mandatory minimums in Illinois, including SB1342, and tell your colleagues to do the same.
Five months later and after early voting has already begun, 39th State Representative Toni Berrios got around to responding to Anne’s letter.
Thank you for reaching out to me about Senate Bill 1342. Constituent input is important to me when voting in Springfield. As the legislative session moves forward, I’ll keep you informed on the bill’s progress through the legislative process. Again, thank you for contacting my office. Please let me know if my office can be of service to you.
Was she for SB1342? Against it? Who knows? It seems Representative Berrios does not know what happened to SB1342.
Someone should let Representative Berrios know that SB1342 failed to be called for a vote back on December 3rd, the last day of the last session of the last General Assembly.
And so it died.
I was corrected. It is still alive and may be revisited now that the General Assembly has reconvened.