Frank Gallagher is after your retirement savings.

Frank Gallagher is the perfect metaphor for state governments and Wall Street when it comes to retirement pensions.

If you’re not a regular viewer of the television show Shameless you are missing a great portrayal of one of the most amoral human beings in the history of entertainment.

That would be Frank Gallagher, played by the wonderful William H. Macy.

Frank is the father of a barely-working class, struggling Chicago south side family, the likes of which makes the word dysfunctional seem wholly inadequate.

But it is Frank I want to focus on here.

Frank Gallagher is a drunk and drug addicted soul whose only reason to actually get a job is to scam some workman’s comp within the first day of work.

In fact, in one episode he takes a job because it requires him to breathe toxic fumes. But when he discovers it would take years to get sick enough to collect on it, he grabs a staple gun and staples his hand to a wall.

The time he is not spending on getting sotted at The Alibi, the local pub, he is working on separating somebody, mostly women, from their savings accounts. Or their meds.

I couldn’t help thinking of Frank Gallagher as I heard about Donald Trump’s plan to toss out a simple reform negotiated under the Obama administration called the Fiduciary Rule.

The Fiduciary Rule was an attempt to keep Wall Street from acting totally like Frank Gallagher when it comes to our retirement savings and investments.

It would require financial advisors to act in their clients’ best interests.

Crazy, right?

The United States Chamber of Commerce has advised Trump to dump the rule.

We are urging immediate action to undo the Department of Labor’s Fiduciary Rule. If enacted, it would choke economic growth, increase frivolous litigation against financial advisers, and make saving for retirement more difficult for hardworking Americans.

Damn! That “more difficult for hardworking Americans” part is exactly the hustle Frank Gallagher would use.

The Labor Department estimates that if enacted, the Fiduciary Rule  will cost industry $16 billion over the next decade, but that it will save IRA investors more than $33 billion.

It seems that by electing Donald Trump, we just invited Frank Gallagher into every current and future retiree’s home.

Rauner put on this earth to cut pensions.


Illinois has gone without a budget longer than any state since the Great Depression.

That would be the one in 1929. Not the Bush Depression of 2008.

When corporate billionaire Bruce Rauner took office promising to shake up Springfield he presented a list of 44 demands, most aimed at working families, in exchange for his signature on a budget.

The Democrats in Springfield, most of whom owe their seats to union and working family voters, said no.

Some would like to blame both sides for the budget stand-off.

Not me. Long-time readers know that I am no fan of Michael Madigan or Springfield Democrats. In fact, when we had a Democratic Governor in the shape of Pat Quinn, everybody was a bit too cozy and collaborative, especially when it came to cutting pensions.

But this is all on Rauner.

Rauner spent $50 million on this last election trying to blame others for this budget debacle and the campaign was a massive failure.

In response there are now reports are that Governor Rauner has reduced his Turnaround  Agenda from 44 to five.

The five, Rauner says, include workman’s comp reform, cutting property taxes,  the school funding formula and – wait for it – pension reform.

He says he is willing to even give in on a few of the five. Want to bet which one he wants to keep?

Yes! Pensions.

You recall that the Illinois Supreme Court ruled in 2015 that state employee pensions were covered by the pension protection clause of the Illinois constitution. The clause states that contractual pensions may not be diminished or impaired.

For current retirees like me this is an ironclad promise and obligation, said the court.

But there is a small loop hole when it comes to current employees. Contract law allows for changes in an agreement as long as there is consideration given. If there is a change in the agreement, employees must be given something of equal or greater value in return. And it may be bargained.

Democratic Senate President John Cullerton and the Governor believe that this is the opening they need.

As my colleague Glen Brown wrote in a recent exchange between the two of us, cross posted on both of our blogs:

Nevertheless, there will be another attempt, not long after the election, for a “modification of contract principles.” Any attempt at modifications of the Pension Protection Clause by the Illinois General Assembly should be seen for what it is: another challenge by the current General Assembly and governor to steal money from the public pension systems so they can avoid addressing the real causes of the state’s budget deficits: the pension ramp, the resultant pension debt, and the state’s insufficient flow of revenue.

I have written many times: contracts supported by consideration are often one-sided, advantageous arrangements, especially a consideration from the Illinois General Assembly that would be in exchange for reductions of originally-vested benefits assured by the Illinois Constitution.

It appears that what the Governor has done is to reduce his demands from 44 to five. But there is really just one.

He can’t touch retirees.

I believe that any deal to cut the pension guarantees of current employees will face the same legal result as the last attempt.

Illinois has had nearly two years without a state budget because Rauner believes he was put on this earth to cut pensions.

Been there. Couldn’t do that.

Over bargaining? What didn’t we get?


So, this happens.

I was at a social event and a fellow state retiree introduced me to an old friend of his that he went to school with on the North Shore, like fifty years ago.

A boarding school.

My friend is a bit of a provocateur, so he mentions my pension activism and that I was a teacher.

I shot him a look.

It seems that there are two things that everybody thinks they are experts on.

Teaching and pensions.

I taught for 30 years. So I actually know something about that. I write, research and organize around pension rights. So I actually know something about that.

Yet I seem to run into people who do neither, but tell me that they know way more than I do.

This is especially true about men who went to boarding school on the North Shore.

They know about these two things because, well, they went to school and the read Crain’s.

“The problem with pensions is that they were over bargained,” he explained knowingly to me.

“Over bargained?” That’s a new one.

Another thing I spent years doing is bargaining. I can remember every one of the dozen teacher contract negotiations I was involved in. So, I know something about bargaining too. I never heard of over bargaining.

This is what happens: We start at one place and through the process of collective bargaining, we give and get some things. The other side gives and gets some things. You keep up the process until each side can walk away satisfied. As a representative of the teachers I always tried to do better than we did last time.

But over bargained?

By this I assume that he thinks we got too much.

The other side always thinks that.


If our pension was over bargained and if bargaining means you give and you get, what didn’t we get?

In the middle of this conversation my mind starts wandering, thinking about what we gave and what we didn’t get.

The man from the North Shore was convinced we would never get our pension.

I told him we would.

He smiled that condescending North Shore smile.

We never got to the other subject he is an expert on.


They still have Pinochet pensions in Chile 43 years after the coup.


Chile’s Augusto Pinochet and Illinois’ Bruce Rauner. Privatizing pensions.

On September 11th, 1973 the fascist military leader of Chile, Augusto Pinochet, led a U.S.-backed coup against the socialist government of Salvador Allende.

Henry Kissinger’s hands were all over it.

Allende was killed

It is still not known how many thousands of people were murdered by the Pinochet government. Thousands disappeared.

Pinochet instituted the free-market policies of the “Chicago Boys,” Chilean economists, the majority of whom were trained at the Department of Economics of the University of Chicago under Milton Friedman.

In 1988, after 17 years as dictator, Pinochet’s government was eventually tossed out of power.

Amazingly, one of the central policies of the Chicago Boys, the privatization of retirement pensions, remains in effect long after the death of the fascist Pinochet.

The Pinochet Pension in Chile looks very much like the one Illinois’ Governor Bruce Rauner would like to see put in place here.

Today’s NY times: 


Hundreds of thousands of protesters marched in Santiago, the capital of Chile, on Aug. 21. The pension funds have chafed at the criticism. CreditXcam/European Pressphoto Agency


SANTIAGO, Chile — Discontent has been brewing for years in Chile over pensions so low that most people must keep working past retirement age. All the while, privately run companies have reaped enormous profits by investing Chileans’ social security savings.

The bubbling anger boiled over in July when Chileans learned that the former wife of a Socialist Party leader was receiving a monthly pension of almost $7,800 after retiring from the prison police department. That figure dwarfs the average monthly pension of $315, which is even less than a monthly minimum-wage salary of $384.

In a country already battered by widespread political and corporate corruption, this was the last straw.

Hundreds of thousands of people marched through Santiago, the capital, and other cities to protest the privatized pension system. More than 1.3 million people, according to organizers, turned up in August, the largest demonstration since Chile’s return to civilian rule in 1990.

One protester was Luis Montero, 69, whose monthly pension is about $150. Like many Chileans, Mr. Montero has mainly worked informal jobs without a contract at wages too meager for him to save enough for retirement. He still does maintenance work at a school to make ends meet.

“I’ve worked my entire life and I’d like to stop and rest, but I can’t,” Mr. Montero said. “I have no idea what I will do when I get older.”

In 1981, the military dictatorship of Gen. Augusto Pinochet privatized the old pay-as-you-go pension system, in which workers, employers and the government all contributed.

Under the privatized system, which President George W. Bush hailed as an example to follow, workers must pay 10 percent of their earnings into accounts operated by private companies known as pension fund administrators, or A.F.P.s, the initials of the term in Spanish. The administrators invest the money and charge workers a commission for transactions and other fees. Employers and the government do not make any contributions to the workers’ accounts.

Chileans were given the option of keeping their old plan or switching to the new system. Most switched. But those entering the work force after 1981 had to invest in the privatized system. (The armed forces and the police were exempted from the change and today enjoy pensions several times higher than those available in the privatized system.)

The money invested by the administrators bolstered Chile’s capital markets, which stimulated economic growth and yielded reasonable returns. Today six A.F.P.s — half of them owned by foreign companies — manage $171 billion in pension funds, equivalent to about 71 percent of Chile’s gross domestic product, according to the office of the supervisor of the pension funds.

But the pioneering privatized system has failed to provide livable pensions for most retirees. If the stock market dips or investments go awry, workers’ savings and retirees’ pension checks decline.

“The pension system is unfair,” said Romina Celis, a 28-year-old teacher who marched in one of the protests. “I don’t know what formula we can use, but there has to be more state participation. We must continue protesting. The thought of reaching old age so precariously is scary.”

Women fare worse than men do because they earn less, are more likely to work intermittently, retire earlier (the retirement age is 65 for men and 60 for women) and have a longer life expectancy.

Nekritz needs to do her homework on pension buyouts.


The latest pension blather in Springfield comes from the Republicans and their best friend across the aisle, Democratic Representative Elaine Nekritz.

Two versions of a pension buyout bill have been filed in the House.

Represenative Mark Batinick, Republican from Plainfield is the sponsor of one of the pension bills.  That would be House Bill 4427.

Republican Representative Mike Fortner from West Chicago has filed House Bill 5625.

Both versions would allow state employees at retirement to take their pension benefit as a lump sum rather than as life-long pension as a defined benefit

Elaine Nekritz chairs the House Personnel and Pensions Committee. The Committee is scheduled to hold hearings on both bills today.

I wouldn’t pay much attention to this if it were just a Republican bill. But Nekritz is a powerful Democrat. She led the fight to pass the unconstitutional Senate Bill 1.

“We want to explore all those options,” said Nekritz.

At this point, no actuarial studies have been done to determine how the numbers would work out. The Commission on Government Forecasting and Accountability is working on some projections, but they are not completed yet.

Nekritz says, “It’s not going to have any significant impact on the unfunded liability or the contribution the state has to make to the pensions.”

Well, then, what is this about?

I figure this is a way to cheat future retirees out of their money. Or why put it out there?

Fortner’s version of the legislation does not use money from the pension systems to make the lump sum payments. Instead, qualified vendors would make the payments to retirees and then receive the full pension benefits from the state pension funds that would have gone to the retirees. The vendors would decide how much of a retiree’s total lump sum to keep as an expense. The amount would have to be disclosed upfront to the retiree.

The lump sum wouldn’t come directly from the public employee pension fund, but would be handed over to a middle man – the vendor – for a fee. How would they determine what the lump sum would be? What if the actuarial figure was a million bucks over twenty years. You can bet they would try and offer the retiree $800,000. That might sound pretty good to the retiree at the time. Yet compared to what the retiree would earn from their defined benefit plan, it is the the equivalent of thievery.

The vendors would decide how much to keep as a fee.

This is nothing more than another privatizing scheme with profits going to the so-called vendor. It’s no different than those places that charge usury rates to poor folks who borrow an advance on their income tax return.

Only worse.

Nekritz said she anticipates several hearings will have to be held on the plans to bring in additional experts who can advise lawmakers about who is likely to participate in such a plan, how many people would participate and how it has worked in the private sector, where similar proposals have been used. “We’ve got a lot of homework to do here,” she said.

I’ll say she does.

And don’t just put down the answers, Elaine.

Show your work.

For a good explanation of the benefits of defined contribution plans see Glen Brown’s blog post he put up today.

Unions concerned with Pearson investments.


The impact of opt out and the movement against high-stakes testing has been impressive when it comes to Pearson’s bottom line.

The British publication Professional Pensions reports that Pearson, a UK-based company that controls much of the U.S. school testing business, has lost 42% of is share value in the last year.

Chicago Teachers Pension Fund, Trade Union Fund Managers and 130 individual shareholders joined Unison in the resolution that will be heard at Pearson’s annual general meeting this April.

The resolution said the company was over-reliant on the education testing programme in the US, which had been affected by a recent change in the law and was also becoming increasingly unpopular. It comes as the company revealed last month it was axing 4,000 jobs – 10% of the company’s workforce.

Unison Capital is a major investment firm, which owns 33,000 shares of Pearson.

The coalition of unions and public employee pension funds, including the CTPF and the AFT control another 40,000 voting shares of Pearson.

“Rather than continue to focus the business on politically poisonous high stakes testing, and axing the jobs of thousands of employees, chief executive John Fallon should be conducting a wholesale reassessment of Pearson’s strategic vision.”

We are retired. Not dead.


-John Dillon blogs at Pension Vocabulary.

As we retirees make 2016 New Year’s promises and resolutions that might guarantee a few months or hopefully years of enjoyment of a life well and long lived, let’s be careful not to accept the Springfield political falsehood that we ourselves are responsible for any exacerbation of the Illinois pension shortfall.

Now or in the future.

Seven months into a budget stalemate, Governor Rauner may kick and scream that he’s against unions, and Madigan’s party may lockstep in their battle against Rauner’s crazed agenda-first demands – but be assured that both sides would gladly dismantle our pension systems if they could.

There’s money to raid.

Meanwhile, as the embattled and insouciant-appearing governor plans a Tier 3 with a 401K savings plan to replace a defined benefit, we should remember a couple of things:

One would be Chief legal counsel Eric Madiar’s reminder to the Chicago City Club that regardless of the increased costs of pension benefits over the years, “pay increases were actually less than actuarial projections…the state’s failure to fund the pensions (is) the main reason we are in this mess.”

Second would be how they tried earlier when constructing SB1.  Remember?

If not, read this earlier post from 2012.

The oldest individual in Illinois passed away last Monday in the East St. Louis area of Illinois.  An announcement came on Saturday, coincidentally, while in Chicago the state House and Senate leadership came to an impasse regarding what to do about breaking earlier promises of benefits to Illinois’ public sector workers.  This includes the COLA, which remains a particularly sticky problem for the lawmakers who realize the likelihood or possibility of unfavorable litigation if they alter (i.e., diminish or impair) the benefit.

Mayette Epps-Miller, born on April 15, 1901, was 111 years old.   Identified in surveys of the elderly as a “supercentarian,” one who lives beyond 110, Mayetta was considered by her remaining family to have been the “rock…who pulled everyone together” (  Such an obituary would leave most of us smiling for the lady.  You go, Mayetta.

On the other hand, if you are a lawmaker in Illinois, this is as frightening as a constituency version of “The Walking Dead,” except the zombies are feasting on much-needed dollars.  Never mind that the dollars were owed them to begin with.

Talk to any legislator in Illinois, he or she will be quick to remind you that we are living too long now.  They say that such changing actuarial demographics make the continued payment of benefits into later years impossible or injurious to payments to later public sector workers.

Of course, an Illinois legislator won’t tell you that the real issue is the colossal sums money diverted for nearly half a century, funds owed but not paid to public sector workers.

Nevertheless, while they would be right to remind that we are living longer than before, that also creates an even greater need to maintain the compounded COLA.

Read the entire post here.

You know that 7% pension pick-up that CPS wants to take away? Don’t believe their hype.


-By John Dillon

The Illinois Policy Institute is angry once again with what their editorialist Diana Sroka Rickert considers another unnecessary handout to Chicago teachers:  the Pension Pickup.

In her December Tribune editorial last week, Rickert urged Chicago’s besieged Mayor Emanuel and CPS CEO Forrest Claypool to end the current practice of providing pension pickups for the Chicago Teachers Union.

“While (they) have busied themselves asking state taxpayers to send hundreds of millions of dollars Chicago’s way, they’re unwilling to use the $174 million that’s already available for them to use for teacher’s pensions.”

But they’re not the peculaters.  The real culprit?  Read on, please.

Chicago teachers are supposed to pay 9 percent of their salaries toward their own retirement savings.  But instead, teachers pay just 2 percent; the rest of the “teachers’ contribution” is picked up by taxpayers, thanks to a clause negotiated into their contract6s in the early 1980s.”

As a retired educator from a suburban district I suppose I could feel a little miffed with having paid 9.4% of my salary each paycheck, instead of 9% like those in the CTU.  Adding to that, if CTU paid only 2% of the 9%; well, why didn’t I get such a deal?

And that’s exactly what Rickert and the IPI want all of us to do.  Let’s not think it out or look into it.  Let’s just be blind angry.

The “deal” that Chicago teachers got in the early 1980s was actually a mandated law by the General Assembly in 1983.  And this statute (40  ILCS 5/17-130.1) provided the opportunity for retirement contributions to be considered part of the negotiating process in salary and benefit settlements during collective bargaining.  In fact, all districts in Illinois got the same deal.

“An Employer or the Board may make these contributions on behalf of its employees by a reduction in the cash salary of the employee or by an offset against a future salary increase or by a combination of a reduction in salary and offset against a future salary increase.”

Teacher’s Union:  We’d like to ask for a 2% increase in our wage benefits across the board this next contract.

Board of Education:  We’d like to find a way to do that.  How about a ½% increase across the board, and we’ll pick up 1.5% of your contribution costs per person?

If` you’re still not sure how this works, it means that my union never debated with the Board over my 9.4% payment.  But just down the highway at another district near the airport, they did and paid only 4% of their 9.4% requirement.

Read the rest of the article here.

Pasgual LoPresti on the Illinois Supremes.


-Pasqual LoPresti

Too bad you missed it Fred. It actually made me believe in the justice system again.

The only bad part was the live feed we watched it on. The video was very choppy and would constantly freeze up but at least we were able to get I’d say 90% of the audio. At times I could swear 9fingers was hacking the feed someway.

Here is my take on it:

A gang of Shitty Hall lawyers all prim and proper on one side that as taxpayers, we retirees pay to go against us.

On our side our lawyers, Mr. Kristof and Mr. Shapiro, who have taken the case on contributions from us, so in a way we pay them also, but gladly.

After a few BS presentations, (I swear these people are zombized) they march out a representative of the municipal pension fund and one from the laborers pension fund. Yes.  The very people who are to look out and properly fund our retirement. To make a long story short, both reps told the court that they slapped the retirees and survivors faces for our own good.

Then it was back to the Shitty Hall lawyers and the judges stopping them at various points to ask them questions or clarify what they just said. They seemed a bit irked at what they were hearing.

Now it gets even better.

By the Shitty Hall’s lawyers own admission the City didn’t pay anything into the funds because by law they didn’t have to.

Amazing argument, right?

The pension funds were well funded, one was funded at 133% and that came from the Shitty Hall lawyer.

Again amazing argument, right ?

I wonder what magic formula they have that you can keep taking from a fund and not put anything into it and by the way that was the retirees money that we paid out of our checks, so if I may add, they stole our money and Daley is walking around a free man. And in fact Daley stole 250 million from the laborers pension fund to shore up the police and fire pension. Then tried again the next year but was stopped.

Amazing, isn’t it?

They also brought up the point that the unions 27 of 31 agreed to this so called reform. The very unions that CAN’T REPRESENT RETIREES BY LAW.

Amazing isn’t it ?

Our two lawyers were smooth and good and not once questioned by the judges. They had a very well presentation prepared with no bumps or curves. They brought up the fact that not one retiree was present at any of these so called reform talks, so how can they say we the retirees agreed to this.

Amazing isn’t it ?

Bottom line folks. Don’t hire any of the Shitty Hall lawyers, not even for a parking ticket ?

And Fred. May I add to your like of music the song by John Lennon, Instant Karma. It plays well with.this.

Hell I even have a smile on my face today !

TRS was rightly quick to calm fears. But this still stinks.


When State Comptroller Leslie Munger announced earlier this week that the state could not afford to pay it’s share of public employee pension contributions, the folks at TRS were rightly quick to point out to members that this would not impact us receiving our monthly pension check.

Since the beginning of Governor Rauner’s holding hostage the state budget to advance his union-busting turnaround agenda, this has always been a fear.

Yet, simply saying that we get our checks doesn’t mean that we, along with thousands of other citizens of the state, are not being hurt by the hi-jacking of state government by the Governor’s political agenda.

Munger says state pensions won’t receive a state payment in November. There will probably be no state payment in December. She has previously said that it is possible that there may not be a payment for six months.

My friend John Dillon asked TRA Communications Director Dave Urbanek if the state has to pay an interest penalty for missed payments.

Mr. Dillon:

There will be no interest rate applied to the delayed state payment for November. State government appropriations to all agencies that are part of that government do not fall under the Illinois Late Payment Act.


Dave Urbanek

And then there is the loss that nobody I know can calculate for me. How much are we losing by not having the money owed to us to invest?

The missing payment is nearly $600 million a month.

If the worst case scenario comes to pass and we are not paid until June, we are talking over $6 billion. $3 billion*

Uninvested. Money lost that we will never get back.

Amanda Kass of the Center for Tax and Budget Accountability explained it to me this way:

“Delay in payments undoubtedly has an impact on investment returns–think of a personal savings account as an example, interest earned from $100 being in the account for 12 months is more than $100 being in the account for only 9 months. Quantifying the impact of the delayed payments in terms of investments (and in-turn future state payments) is quite difficult.”

So, how much?

Too much.

*When I first posted I made a typo when I wrote $6 billion.