The first thing to help solve Illinois pension woes is to make retirement age 65 for everyone. Thirty years of service is not enough to fund retirement. Very few people in the private sector retire before 65. Social Security does not kick in fully until 66. Why should government pensions start earlier.
My problem with all this is as always hypothetical numbers..let’s talk reality. The vast majority pay into social security that’s a much lower payout then pensions and cola is not a guarantee for most seniors who need those increases as much a those pensioners. Difference is that those dependent on their social security pay for it in their taxes while working..and in most cases,they also pay into the fund for these government and education based pensions as well with little or as in most cases no participation in those payouts. It is an unfair system as social security recipients are mandated into their contributions and the pensioners in many cases don’t participate in their own retirement windfalls. It’s all smoke and mirrors and the divide is not a fair or equal plan
Let’s assume your assumptions are spot on. It’s a race to what comes first, bankruptcy or inflation? If possible, apply your assumptions to States who have elimated/suspended COLAs – ie NJ…..seems like their unfunded liability is running neck and neck with IL!
The only reason NYC avoided bankruptcy in the 1970s is the high inflation of that decade cut the value of retroactively increased pensions and debts run up in the 1960s in half. Basically the CPI doubled in 10 years. This benefitted Baby Boomers and hurt their poorer parents (remember “seniors on fixed incomes?”) Read to the end of this post for a discussion of how that happened.
Now low inflation is benefitting Baby Boomers and hurting their poorer parents. This is not an accident.
Meanwhile in NYC all those retroactive pension increases of the late 1960s (culminating in a big one for teachers in 1970) have been repeated. The cost is being hidden and put off, and lied about. There is nowhere in the U.S. that past taxpayers are less guilty, and the public unions more guilty, with regard to the public employee pension disaster, and it isn’t even close. No other taxpayers have paid more for pensions.
Illinois is not broke. It chooses to spend $3 Billion each year on state services to foreign citizens residing in Illinois. These costs are not mandated by an Illinois Supreme Court decision, as are state worker pension contracts. See map: https://thefederalistpapers.org/us/new-map-cost-illegal-immigration-state-2
This is a ridiculous article! And you dear, are as bad as our politicians. You basically are hoping to screw the retiree so you can actuarialy resolve under-funding. Sure, leave the pensioner short on real income 15 or 20 yrs into retirement so you can call the pension funded! And BTW, anyone who manages retirement funding knows a CPI-based COLA is not reflective of reality as the share of expenses in retirement is more heavily weighted to healthcare, which rises in cost much greater than CPI. Also, curious where you are seeing a pensioner making more in retirement than working as a result of the COLA exceeding CPI? Certainly this allows a net “gain” for the pensioner, but for example CPD takes out 75% of salary at retirement (with full time, 29 yrs), and I believe ISP is 80%. Who in the system is retiring with benefits at 100% of salary at retirement so this net COLA gain would have them making more than when they were working?!?!? You sound like you’re too deep into the actuarial forest to see the trees…
The first thing to help solve Illinois pension woes is to make retirement age 65 for everyone. Thirty years of service is not enough to fund retirement. Very few people in the private sector retire before 65. Social Security does not kick in fully until 66. Why should government pensions start earlier.
In 2013, 35.7% of men and 41.3% of women signed up at age 62.
My problem with all this is as always hypothetical numbers..let’s talk reality. The vast majority pay into social security that’s a much lower payout then pensions and cola is not a guarantee for most seniors who need those increases as much a those pensioners. Difference is that those dependent on their social security pay for it in their taxes while working..and in most cases,they also pay into the fund for these government and education based pensions as well with little or as in most cases no participation in those payouts. It is an unfair system as social security recipients are mandated into their contributions and the pensioners in many cases don’t participate in their own retirement windfalls. It’s all smoke and mirrors and the divide is not a fair or equal plan
Let’s assume your assumptions are spot on. It’s a race to what comes first, bankruptcy or inflation? If possible, apply your assumptions to States who have elimated/suspended COLAs – ie NJ…..seems like their unfunded liability is running neck and neck with IL!
The only reason NYC avoided bankruptcy in the 1970s is the high inflation of that decade cut the value of retroactively increased pensions and debts run up in the 1960s in half. Basically the CPI doubled in 10 years. This benefitted Baby Boomers and hurt their poorer parents (remember “seniors on fixed incomes?”) Read to the end of this post for a discussion of how that happened.
https://larrylittlefield.wordpress.com/2017/05/30/deblasios-2018-nyc-budget-detroits-bankruptcy-and-nycs-recovery-from-the-1970s/
Now low inflation is benefitting Baby Boomers and hurting their poorer parents. This is not an accident.
Meanwhile in NYC all those retroactive pension increases of the late 1960s (culminating in a big one for teachers in 1970) have been repeated. The cost is being hidden and put off, and lied about. There is nowhere in the U.S. that past taxpayers are less guilty, and the public unions more guilty, with regard to the public employee pension disaster, and it isn’t even close. No other taxpayers have paid more for pensions.
https://larrylittlefield.wordpress.com/2018/12/16/sold-out-futures-by-state-public-employee-pensions-in-fy-2016/
Or paid more in state and local taxes over the decades.
https://larrylittlefield.wordpress.com/2018/12/20/sold-out-futures-by-state-the-sold-out-future-ranking-for-2016/
Illinois is not broke. It chooses to spend $3 Billion each year on state services to foreign citizens residing in Illinois. These costs are not mandated by an Illinois Supreme Court decision, as are state worker pension contracts. See map: https://thefederalistpapers.org/us/new-map-cost-illegal-immigration-state-2
This is a ridiculous article! And you dear, are as bad as our politicians. You basically are hoping to screw the retiree so you can actuarialy resolve under-funding. Sure, leave the pensioner short on real income 15 or 20 yrs into retirement so you can call the pension funded! And BTW, anyone who manages retirement funding knows a CPI-based COLA is not reflective of reality as the share of expenses in retirement is more heavily weighted to healthcare, which rises in cost much greater than CPI. Also, curious where you are seeing a pensioner making more in retirement than working as a result of the COLA exceeding CPI? Certainly this allows a net “gain” for the pensioner, but for example CPD takes out 75% of salary at retirement (with full time, 29 yrs), and I believe ISP is 80%. Who in the system is retiring with benefits at 100% of salary at retirement so this net COLA gain would have them making more than when they were working?!?!? You sound like you’re too deep into the actuarial forest to see the trees…