Illinois Supreme Court Strikes Down Chicago Pensions Plan
Source: Associated Press
The Illinois Supreme Court dealt another devastating blow Thursday to the state's impatient attempts to control its ballooning public pension debt by striking down a state law that would have cut into an $8 billion hole in two of Chicago's employee pension accounts.
The law forced the city to significantly ramp up its taxpayer-fueled contributions, but also cut benefits and required larger contributions from about 61,000 current and retired municipal civil servant workers. The high court unanimously sided with workers who sued the city, arguing that the law violated the Illinois Constitution's protections against reducing promised pension benefits.
The city whose decades of underfunding is overwhelmingly to blame for the crisis has warned that the funds would be insolvent within 15 years without the change. But the court said that despite those warnings, the law's provisions "exceed the General Assembly's authority."
The ruling mimicked one by the high court less than a year ago involving a separate pension bailout: the $111 billion deficit in state-employee retirement accounts.
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Read more: http://abcnews.go.com/Politics/wireStory/illinois-supreme-court-strikes-chicago-pensions-plan-37896294
By JOHN O'CONNOR, ASSOCIATED PRESS
SPRINGFIELD, Ill. Mar 24, 2016, 1:05 PM ET
elleng
(131,129 posts)'The high court unanimously sided with workers who sued the city, arguing that the law violated the Illinois Constitution's protections against reducing promised pension benefits.'
We need more of such legislation and decisions.
upaloopa
(11,417 posts)If we could get back to the place where all workers could belong to a defined benefit pension plan we could put less emphases on Social Security as a retirement safety net.
We must bring back jobs, living wages and pension plans as a complete package.
Adrahil
(13,340 posts)Most people do not spend 30 years with the same company. Most move about, and that makes defined benefit plans very cumbersome. IMO, we need a focus on savings-based plans that are portable (more portable than the current 401K plans), and strengthening and increasing social security benefits.
Pensions are a great negotiating tool but encourage bad behavior by management, and force people to remain in jobs they hate in order to qualify for their benefits. I have known so many people who desperately want to move on but need another 2 or 3 years of suffering at a horrible job to reach full benefits- this is not good for either employee or employer.
I'd prefer expanding Social Security and/or improved and expanded 401k-type plans. I would love to put more into my current 401k but have hit the contribution limit (which will not allow me to save enough in the plan for retirement) and have a very limited selection of funds in which to put my 401k (all of which charge management fees).
antigop
(12,778 posts)same company.
http://www.dol.gov/ebsa/publications/wyskapr.html#chapter2
In a defined benefit plan, an employer can require that employees have 5 years of service in order to become 100 percent vested in the employer funded benefits (called cliff vesting). Employers also can choose a graduated vesting schedule, which requires an employee to work 7 years in order to be 100 percent vested, but provides at least 20 percent vesting after 3 years, 40 percent after 4 years, 60 percent after 5 years, and 80 percent after 6 years of service. The permitted vesting schedules for current defined benefit plans are shown in Table 3 below. Plans may provide a different schedule as long as it is more generous than these vesting schedules. (Unlike most defined benefit plans, in a cash balance plan, employees vest in employer contributions after 3 years.)
Table 3 shows the vesting requirements for defined benefit pension plans
but the way pensions are written the are back loaded, so working at 6 different companies for 5 years each will net a significantly lower pension than 1 company for 30 years.
I have no problem with 401k's and the like, its just that management needs to fund them at the same level as they do pensions -- 8 to 10% of salary if not more.
antigop
(12,778 posts)Adrahil
(13,340 posts)I am vested in a pension from earlier in my career. But by the time I retire, it will be worth little, because it will be based on my 3 highest earning years there.
I could, of course, stack up 4-5 pensions for my retirement... each one getting skimmed by a management firm. That's assuming, of course, the company doesn't screw me out of the pension just before, or during retirement, as happened to my father.
We don't work like we used to and the old retirement system no longer works.
antigop
(12,778 posts)EFFICIENT way to provide retirement benefits.
Just ask any actuary.
eta: So stop pushing Wall Street talking points.
eta(2): http://www.pbs.org/wgbh/frontline/film/retirement-gamble/
eta(3):
Please educate yourself and stop spreading Wall Street talking points.
kas125
(2,472 posts)What I find despicable is that no news articles or talking heads on Chicago tv ever explain that to people when they're talking about the state workers' pensions.
upaloopa
(11,417 posts)and social security.
Human101948
(3,457 posts)Loking forward to seeing you around here more often.
upaloopa
(11,417 posts)Jitter65
(3,089 posts)healthcare systems.
Years ago in our manufacturing heyday, most workers didn't survive beyond 65-70. Benefits from pension funds were ample to source insurances, pensions, and survivor annuities etc. Really good jobs with good benefits and wages are almost a thing of the past...and this is not likely to change for the overwhelming part of our workforce. More and more pension funds will be facing similar situations like that in Chicago. Not only are corporate vultures moving jobs out of the country, they are also moving benefits with them. Workers in other countries do not demand wages or benefits anywhere near those of workers here. The benefit of course, is that we enjoy a much higher standard of living...dwindling but much higher.
Thanks to all the progress we have been making from huge investments into medical research, people are living longer and many are living longer with debilitating diseases. While it may sound crass, the burden on our changing industrial economic society. The boomers have been enjoying relatively good health but while taking care of aging and sick parents sandwich between the children and grands as well.
There are consequences to "progress" both good and bad. Simple solutions like free college and single-payer healthcare do not address and will not solve the challenges facing us. Free college is no good unless it is educating and training students for 21 century jobs and social needs. Single-payer cannot work well unless we are ready for the Federal government to expand greatly with all medical professionals working as Federal employees (see how that works out with Congress) with "cadillac" medical facilities and insurances sapping up the best and brightest medical talent from the Feds.
The challenges creep up on us as we come to believe that we have made great progress. The solutions will also have to come ...here we go...incrementally and we focus on each new challenge as it arises and try to PREDICT those yet to come.
This may seem off topic from the OP title but nothing occurs in a vacuum. The problem facing us concerning pensions is related to everything else going on in our economy...just try to imagine all the other things that are related to it.
Scuba
(53,475 posts).... The state lacks the political will to tax those who have all the money.
N/T
PatrickforO
(14,592 posts)FAR too long. These workers BLED for their pensions and to take them away because corporate-owned Republicans stole from the fund and then need to 'cut costs' is criminal bullshit.
These are the same greed-head profit over people motherfuckers who decided to let the people of Flint drink out of lead pipes as a 'cost cutting measure.'
Hey, I have a good idea - let's put these assholes on trial for systematic theft from the people.
Iggo
(47,568 posts)Not Sure
(735 posts)...to people who gave their lives for a promise of retirement and who now have no more working life to give. I can only hope eternal suffering awaits such worthless evil fucks.
xloadiex
(628 posts)tax breaks at our expense. In the meantime, My property taxes, water, and now a monthly garbage bill just went up.
http://wgntv.com/2016/02/17/donald-trumps-multi-million-dollar-chicago-tax-break/