Author: Illinois Senate Democrats
Title: Senate President talks pensions with City Club of Chicago (Video)
Publication: Illinois Senate Democrats Website
Date: March 19, 2012
On Monday, Senate President John J. Cullerton returned to the Chicago's City Club to provide his personal perspective on pensions.
Cullerton's speech put the Illinois pension system into perspective. The President reiterated his belief that existing public pensions are protected by the Illinois Constitution, but said there are other avenues that could draw down the state’s substantial retirement costs. President Cullerton highlighted possible reforms lawmakers could pursue that could potentially save the state millions.
The Senate President also provided the crowd of civic leaders with a visual explanation when it comes to the issue of the pension issue.
The Power Point presentation is available here: http://tinyurl.com/cullertonPPT
The video of Cullerton's speech is available here: http://tinyurl.com/cullertonpension
Comments from UIC UNITED's Bill Troyer: Dick and I heard the above give the best speech about pensions that I have heard. He really laid it out from the past causes to a proposed solutions. It was about 20-25 minutes not including Q & A. One of the questions asked was if the speech going to be available on videotape and the answer was yes, and the source was his senate office I believe. In this missive I will skip the back ground and go to his proposed solutions. There is essentially two. First, He proposed for TRS only, to stop state payments of the employer portion of the pension and mandate that it be paid by the school district(s). Second, He proposed
that the COLA not be compounded as it is now.
He did not say these changes would not affect current retires nor did he say they would not. He implied ( and I could be wrong ) that they would not. And even if they would any changes would not be retroactive. Current SURS retirees would not be affected directly by the proposed TRS changes. TRS is the biggest recipient of state funding and if the state would be no longer responsible for it it would be substantially less costly for the state to make the required contributions for SURS,the state employees, and the judges and legislators funds.
How much would would compounding cost us? As a test case I decided to run the numbers of my on case. I have been retiried since 12/31/99. I have received pension payments for a little more than 12 years. My monthy pension has increased approximately 43%. It is compounded. If it had not been compounded it would have increased by 36%.
Another way to look at it is how long does it take to double your income by compounding vs not compounding. Using 3% as the yearly increase it take 33.3 years to double without compounding and 24 years with compounding.
It costs us something, but not much by my estimates if they don't touch anything else, such as health insurance, and continue to make retirement income free of state income tax.
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