The sound of crickets on “significant” pension changes.

klickna
Tomorrow is IEA President Cinda Klickna’s last day on the job. Tell me if you notice the difference.

If it weren’t for the email blast from the Teacher Retirement System to members telling us about what they called the significant changes – the creation of a Tier III, we would still be in the dark.

Nothing from the leadership of any organizations that represent retired and future retired teachers.

It wasn’t until yesterday that Joe Cahill at Crain’s informed readers that the new budget would deepen the pension debt with another version of a pension holiday.

Only the Illinois’ Supreme Court’s ruling upholding the pension protection clause offers any protection to current retirees.

Thank God for Ms. Kinney and Mr. Green.

They were the delegates to the 1970 Illinois Constitutional Convention that made sure the pension protection clause was inserted because they knew no politician could be trusted with our pensions.

But the pension protection clause didn’t prevent the Democratic legislature from creating a Tier II which required teachers hired after January 1, 2011 to pay 9% of their salary into the pension system with a requirement that they work until they were 67 and receive a pension valued at only 6%.

I asked Senator Dan Biss about Tier III. He is one of only two Democratic Party candidates running for governor who got to vote on the budget package. The other is Scott Drury.

I didn’t talk to Drury yet.

Senator Biss responded briefly.

The creation of the Tier III plan is a bad idea that I oppose. Its voluntary nature made it fairly easy for me to decide to support the package notwithstanding that, but I was frustrated to see this proposal in the final package.

I find this response confusing since a voluntary option to put money into a privately managed annuity paid for by TRS and local school districts is key to Tier III. It is a foot in the door for Rauner’s plan to turn all public pensions into private annuities.

Daniel,

Thanks for your brief response.

I think that Tier III – along with the change to the estimated return on TRS investments – are terrible ideas which are not mitigated by the voluntary component of Tier III. I look forward to talking about this when we schedule a date for you on our radio show/podcast.

-Fred

 

Fred,

Thanks — likewise looking forward to it. So just to make sure I understand, you think the assumed rate of return on TRS investments should be higher than it is now?

Daniel

 

Daniel,

The change by the legislature reduces the amount the state pays into the system. It will increase the liability. Where does the so-called $1.5 billion in savings come from? Shifting costs to the local school districts and reducing the amount paid into the system by rolling back the change to the assumed rate of return on investments. The action of the legislature increases the assumed rate. Just to make sure I understand, you voted to return to the old assumed rate which is higher.

Fred

 

Fred,

Oh I see, sorry. You’re talking about the so-called “smoothing”? Yeah I hate that.

-Daniel

I don’t know, folks. Is it just me?

3 Replies to “The sound of crickets on “significant” pension changes.”

  1. I am more worried about the smoothing which amounts to a pension holiday. I think t 3 may really be a way for the higher paid to put more money in a private annuity and come out ahead of teir 2 which you correctly point out is a joke. Back to the smoothing I really think we should point out that it is really teir 2 employees who will be bailing out the teir 1 debt over time rather than the taxpayers. I would add the poor and middle class taxpayers opt this state along with the state workers and teachers have paid in their part . The pension holidays have been a huge break to the rich who pay little in tax on this state. They may have the lowest taxes of the rich in any world class city. Those who make over 200000 a year make a quarter of all income in Illinois. High taxes do hurt Our economy. Our high taxes on the poor….and so do our low taxes on the rich. I have another question for Dan Biss. Will. Post when he is scheduled on hitting left.

  2. …Because we are victims of today’s disappearing and weakened organized labor unions that were once the guardians of middle-class workers and a representative democracy; because we are victims of our unions’ lack of strong leadership and their lack of sustained organizational acumen, and because of our own indecisiveness and political ignorance; because of our inability to marshal essential resources and to draw upon experts in the fields of economics and law; because of our inability to build an effective coalition and to launch a counter-attack against the arrogant, wealthy minority that is waging an economic war against the poor and middle class in Illinois and elsewhere, we will continue to be the scapegoats for the reprehensible problems created by the “wealthy elite” until we mobilize our collective efforts against their powerful economic interests, their lucrative lobbying of the state’s policymakers, and their insistence upon deficit reduction by way of public “pension reform” (https://teacherpoetmusicianglenbrown.blogspot.com/2012/02/why-illinois-sb-512-is-devious-ruse.html).

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