Keeping retirement weird. Putting a face to pension theft.

PUT A FACE ON IT

Unless you read Jeff Johnson’s guest post on this site yesterday (and several thousand of you did based on my count) you may not know that there is a trial going on in Chicago to enjoin Rahm Emanuel from stealing city retiree pensions.

Last year the Mayor went to his pal Michael Madigan and got the slime down in Springfield to allow him to cut and freeze pension benefits. They wouldn’t wait for the Illinois Supreme Court to rule on their earlier pension grab called Senate Bill 1.

Some city union leaders put their stamp of approval on theft. But not the CTU or AFSCME.

Four unions went to court on behalf of retirees and two retirees testified yesterday.

Mark Brown writes a column for the Chicago Sun-Times.

He drank Rahm’s Kool-Aid that pension theft is needed to balance the city budget.

But even Brown cannot turn away from the faces of real retirees and what pension theft means to them.

Today he writes:

City of Chicago retirees Mary J. Jones and Barbara Lomax took turns hobbling to the witness stand Friday in a Daley Center courtroom to help make the case against reducing city pension benefits.

Jones, 62, and Lomax, 65, are among thousands of retirees whose annual cost-of-living increases took a trim Jan. 1 under a new state law intended to rescue two struggling city pension funds.

Their pensions continue to grow, mind you, just not by as much as they were promised when they retired.

Because of that broken commitment, their lawyers say the legislation negotiated by Mayor Rahm Emanuel with some city unions should be declared unconstitutional.

In the meantime, the retirees want its provisions set aside temporarily until the Illinois Supreme Court has ruled on a similar challenge to a new state pension law.

The Emanuel Administration counters that the law is sound and halting its implementation would risk a financially disastrous negative reaction from credit ratings agencies that want the city to fix its pension problems.

The examples of Jones and Lomax are reminders that, despite what we know to be the bloated pensions of many city workers, little people also will get hurt in the process of cleaning up the mess — although arguably not as badly as they might if the pension funds were allowed to continue on their previous path to insolvency.

But the two grandmothers’ pensions also are a reminder of the foolish mistakes that got us into this jam in the first place.

Jones and Lomax were both beneficiaries of early retirement programs, magical deals in which city workers were allowed to retire early with full benefits.

City officials touted such programs as resulting in an overall taxpayer savings as older workers were replaced by less-costly new hires.

The savings was a mirage, resulting only from the fact the city wasn’t legally required to pay enough money into the pension funds to support the benefits that would eventually have to be paid. It was just one of many such short-sighted decisions now coming home to roost.

Jones was 51 and Lomax 54 when the city offered them what they saw as an attractive retirement package in 2004. They’ve been drawing a pension ever since.

Under the 3 percent annual compounded cost-of-living adjustments applicable under the previous law, those pensions are now some 34 percent greater than when the women retired.

Jones, who spent 33 years working for Chicago Public Library, is scheduled to receive a pension of $42,163 this year. That’s $360 more than she got last year, but $900 less she would have received under the old law. She does not receive Social Security.

Lomax, who worked 19 years in various city clerical jobs, is due a $27,922 pension in 2015 — $235 more than last year but $600 less than previously scheduled. She also gets $56 a month in Social Security.

As you can see, neither woman is on easy street. Jones lives with her mother and two grandchildren and says she is their primary financial support. Lomax lives alone with her chihuahua and two birds and takes 10 medications daily for her blood pressure, congestive heart failure and asthma. Both women tell me they never worked politics.

The new cost-of-living adjustment will pay retirees only 0.85 percent more this year and does not compound. Retirees will receive no adjustment at all in 2017, 2019 and 2025.

Depending on the size of future adjustments, someone with even a relatively modest pension benefit such as Jones and Lomax will lose tens of thousands of dollars over a 20-year period. That’s why the small change results in a huge savings to taxpayers.

Lomax, for one, doesn’t seem so sure she’ll live that long if the city doesn’t restore the full increase, which she calls a “life-or-death situation” because she can’t afford to pay for all her medication.

Retirees emphasize the reduced pension payments are coming at the same time the city is phasing out their subsidized health insurance, which means their net pay is lower than it was last year.

If you’ve followed my coverage of this issue, then you know I’m sympathetic to the needs of state and local governments to pare back the pensions, and I believe Emanuel has struck a reasonable approach.

But we should never lose sight of what a lousy thing it is to take away pension benefits from people who are already retired and were counting on the promises made to them by the people we elected to represent us.

And then there is the question of why we keep electing those people when they don’t represent us?

15 thoughts on “Keeping retirement weird. Putting a face to pension theft.

  1. Great stuff here, thanks. Yeah, you can’t just pull the rug on near retirees or retirees. Something does need to happen to restore the pensions towards solvency but it just can’t come on the backs of public workers who have lived up to their end of the bargain.

      1. Immoral means nothing to those who voted for SB1. In Illinois, it is unconstitutional!
        Why did some unions go along with Rahm? Because they were blackmailed, Rahm threatened to contract out their jobs if they didn’t go along with him.
        Eventually he will probably contract out their jobs anyway. They just bought some time is all. Someone just proposed a law to let cities and towns in Illinois to declare bankruptcy to get out of pension payments. Rahm is halfway there already. He has already shown he is MORALLY BANKRUPT.

  2. 80% of public school teachers are women. Women live longer than men, so somewhere between 85% and 90% of retired teachers are elderly women in their 60’s, 70’s, 80’s. and 90’s!! My mother, a longtime 2nd grade school teacher, died last year at age 92, with a top pension of $28,000!! And now rich 1%er Billionaire Bruce Rauner, who makes over one million dollars a WEEK says these old ladies are overpaid and greedy! This man has NO compassion!!!! NO humanity!!! He doesn’t even lie and FAKE compassion!!!! He lets you know right up front that he hates the working poor and the elderly!!!! WHY WHY WHY OH WHY did we elect him!!?? Can’t he give a speech and PRETEND to care? Even just for TWO minutes?!!!???

    1. It was not as much Rauner winning as it was Quinn losing, but the effects are the same. Rauner did PRETEND to care, until after the election. He is so glad the election is over, he doesn’t have to hide his hatred of unions, union members, public employees and retirees, and his special hatred of unionized public school teachers.

    2. That “someone” who told municipalities to go bankrupt to skirt pensions is none other than Rauner. He thinks that because he cut and run with his vulture capital deals the same applies here. Thank you everyone who put this fraud in office.

  3. One simple question, y didn’t they exercise they’re police powers on the parking meter CONTRACT and the bd of Ed bond CONTRACT. I guess the il constitution doesn’t mean anything.

    Sent from my iPhone

    >

    1. Mayor (1) told the Board of Ed that unfortunately there is a thing called a contract. In other words contracts that benefit bankers and the wealthy elite friends of Emanuel are valid but not for blue collar hard working people.

  4. There are over 3,000 pensioners in the MEABF system that have pensions that double Ms. Lomax’ s pension. What’s preventing each pension system from re-distributing some of those pensions to retirees like Ms Lomax? The more you make, the more you redistribute. Even with the current compounded COLA structure, this could be implemented. Those at the bottom would get better COLA’s over time and those at the top would get worse COLA’s, which would ultimately save the state money too . Benefits aren’t diminished or impaired as the total pot remains the same.

    Social Security already has a weighted system that benefits career lower earners or those who exited the workforce early in their careers to raise families or what not. Those who earn more and put in more don’t necessarily get that benefit back in retirement. If we have this social contract at the Federal level, where the better-off subsidize the retirements of those less fortunate, why not in our state pensions? Where is the progressiveness in our state pension system?

    1. The state of Illinois has failed to pay into the system what it owes. It has failed to do this since 1917. The city is new to this scam, but still guilty. And your solution is to have one group of pensioners pay what is owed to them to another group of pensioners. This is surely a share-the-no-wealth scheme.

      1. I agree…restore COLA as it was before for Chicago and give Ms Lomax the same pension she had before. What I’m saying is on top of that, why can’t the city (or state) have a progressive system like SS? Even a fully funded system should redistribute some portion of retirement wealth from higher to lower. Like top third to lower third. Can’t one $100K pensioner throw even $100 her way?

  5. Somehow people seem to be able to easily dismiss the fact that the money the state did not pay into the pension system was used for other budget items that benefited everybody (theoretically). Our pension money has supported everyone for decades and now we are supposed to absorb the cost of underfunding.

    1. It’s because they don’t understand the fact that retirees have been planting the flowers and fixing the potholes all these years. Surely no one guilty of theft will point out their thievery.

  6. Fred,
    You are probably already aware of this, but in his Democratic reply to Rauner;s State of the State this week, Dan Kotowski, (D-Park Ridge) referred to HUNDREDS OF MILLIONS OF DOLLARS in “rainy day funds” in state accounts while he implored Rauner to use those funds for needed programs. How can the state say it is broke when with all this cash lying around? The lawyers for the current pension case need to know about this if they do not know already. The statement appears in writing at the bottom of the video page of Kotowski et al talking about the address on the WTTW website. In the video, he refers to a BILLIONS DOLLARS in one of the funds.

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