4 ms·

Illinois [0] is not alone but its far simpler to find good figures on how bad the state and various counties and cities are failing their employees and resident

Illinois [0] is not alone but its far simpler to find good figures on how bad the state and various counties and cities are failing their employees and residents. There was hope of a Federal bailout of all pension funds, numerous covid19 bills tried to bury them into the dollars, but fortunately that may be off the table as the Congressional elections did not pan out as needed. Yyes, the expectation was the Feds would not use the Pension Benefit Guarantee System to salvage something but actually fund them with tax dollars. The PBGS should be the default solution but is not a friendly solution as benefits are generally brought back from silly levels. The issue with many public pension systems is that too many payouts are excessive. No pension system, notably no public, show being paying out six figure retirements in addition to health benefits. California had to use a law to cap theirs around 125k but that has faced numerous challenges and may see more in the future. They do deserve their retirement pay but it needs to be reasonable and equal across the board to best serve the public and employee interest. The lower paid employees are not well served and the managerial and certain others are over compensated in retirement. [0]https://www.illinoispolicy.org/reports/pension-apocalypse-covid-19-exposes-long-running-fragility-of-illinois-public-pensions/ https://www.illinoispolicy.org/reports/pension-apocalypse-co...

eldavido 6y ago
The pensions payouts are simply outrageous. Do the math, you'll see a 60-70% final value pension on 100k salary (60-70k/year) with a 3% cost of living increase (standard in Illinois) is worth 1.8-2.0 million dollars (25 years @ 3.5% discount rate). This is equivalent to having nearly 2 million dollars saved in a retirement account and when you retire, buying an annuity with credit quality equivalent to a promise from a major government (not a junk bond which may become insolvent). Anyone who thinks that's "fair" really needs a reality check. 600k pensioners in Illinois [1], many of them living out of state, and the ones that live in-state aren't even taxed on their pension income. They also don't have to pay for health insurance. This is simply insane. There's really no other word for it. This needs to be indexed to private benefits or otherwise tethered to reality. Sidenote. We need a rethink of public service in this country (US). The old bargain of "you get paid less working for the government but the benefits and job security are better" needs to go. Everyone receiving this $2 million entitlement is going to say, well, I work for the government so I deserve my "better benefits". It shouldn't matter if you work private or public sector. There needs to be some equivalence otherwise you get Illinois, where politician after politician promises great treatment to AFSCME and SEIU and to nobody's surprise, no real attempt is ever made to fix this broken system. [1] https://ballotpedia.org/Public_pensions_in_Illinois https://ballotpedia.org/Public_pensions_in_Illinois
- notJim 6y ago
  I'm not sure I see what the problem is with these pensions. Standard retirement advice is that one should save enough money to live in retirement at a similar lifestyle that they lived while working. If the idea of these pensions is that your salary is lower, but you need to set aside less for retirement, what is the issue? As far as the $2 million figure, if you go to any retirement calculator and try to figure out how much you need to save to have a similar lifestyle in retirement as to working, you will indeed find they advise you to save $2-4m. In the private sector, you're expected to do this on your own, but you get a higher salary to compensate. Looking at my own career, a comparable government job seems to pay about $40k less than a private sector job. If your argument comes down to the public pensions being too generous relative to private ones, shouldn't we instead make private pensions more generous? Why do we want old people who work their whole lives to have a massive step down in lifestyle when they retire? Is that what you want for yourself or your parents?
  - lotsofpulp 6y ago
    That's not the argument. The argument is the state and city government remuneration model of defined benefit pensions and other post employment benefits such as retiree healthcare results in a situation where voters of today, politicians, and higher ranking government employees especially in positions of power with the unions are all incentivized to dump the cost of today's labor onto taxpayers decades into the future. I'm sure everyone is in agreement for giving everyone an awesome life. The problem is no one wants to pay for it. The proof is that voters won't vote for a politician who would compensate government employees a cash amount in their 401k equivalent to the defined benefit pension, because that would require increased taxes compared to a politician that pushes those costs into the future via defined benefit pensions. And taxpayer funded defined benefit pensions and retiree healthcare are a proven vehicle for corruption where costs are shifted from today to tomorrow. And unless the government has the power to print money, they should not be in the business of promising people money decades in the future. That's the only way I see to prevent a repeat of IL/Chicago/Detroit/NJ/CT/RI/KY/CA/San Diego, and the list goes on and on.
    - 6y ago
deleted 6y ago
[deleted]

eldavido 6y ago

The pensions payouts are simply outrageous. Do the math, you'll see a 60-70% final value pension on 100k salary (60-70k/year) with a 3% cost of living increase (standard in Illinois) is worth 1.8-2.0 million dollars (25 years @ 3.5% discount rate). This is equivalent to having nearly 2 million dollars saved in a retirement account and when you retire, buying an annuity with credit quality equivalent to a promise from a major government (not a junk bond which may become insolvent). Anyone who thinks that's "fair" really needs a reality check. 600k pensioners in Illinois [1], many of them living out of state, and the ones that live in-state aren't even taxed on their pension income. They also don't have to pay for health insurance. This is simply insane. There's really no other word for it. This needs to be indexed to private benefits or otherwise tethered to reality. Sidenote. We need a rethink of public service in this country (US). The old bargain of "you get paid less working for the government but the benefits and job security are better" needs to go. Everyone receiving this $2 million entitlement is going to say, well, I work for the government so I deserve my "better benefits". It shouldn't matter if you work private or public sector. There needs to be some equivalence otherwise you get Illinois, where politician after politician promises great treatment to AFSCME and SEIU and to nobody's surprise, no real attempt is ever made to fix this broken system. [1] https://ballotpedia.org/Public_pensions_in_Illinois https://ballotpedia.org/Public_pensions_in_Illinois

notJim 6y ago
I'm not sure I see what the problem is with these pensions. Standard retirement advice is that one should save enough money to live in retirement at a similar lifestyle that they lived while working. If the idea of these pensions is that your salary is lower, but you need to set aside less for retirement, what is the issue? As far as the $2 million figure, if you go to any retirement calculator and try to figure out how much you need to save to have a similar lifestyle in retirement as to working, you will indeed find they advise you to save $2-4m. In the private sector, you're expected to do this on your own, but you get a higher salary to compensate. Looking at my own career, a comparable government job seems to pay about $40k less than a private sector job. If your argument comes down to the public pensions being too generous relative to private ones, shouldn't we instead make private pensions more generous? Why do we want old people who work their whole lives to have a massive step down in lifestyle when they retire? Is that what you want for yourself or your parents?
- lotsofpulp 6y ago
  That's not the argument. The argument is the state and city government remuneration model of defined benefit pensions and other post employment benefits such as retiree healthcare results in a situation where voters of today, politicians, and higher ranking government employees especially in positions of power with the unions are all incentivized to dump the cost of today's labor onto taxpayers decades into the future. I'm sure everyone is in agreement for giving everyone an awesome life. The problem is no one wants to pay for it. The proof is that voters won't vote for a politician who would compensate government employees a cash amount in their 401k equivalent to the defined benefit pension, because that would require increased taxes compared to a politician that pushes those costs into the future via defined benefit pensions. And taxpayer funded defined benefit pensions and retiree healthcare are a proven vehicle for corruption where costs are shifted from today to tomorrow. And unless the government has the power to print money, they should not be in the business of promising people money decades in the future. That's the only way I see to prevent a repeat of IL/Chicago/Detroit/NJ/CT/RI/KY/CA/San Diego, and the list goes on and on.
  - 6y ago

deleted 6y ago

[deleted]