Badges - Attack on City pension plans,,,from the Sun-Times

  • From: CHK8093@xxxxxxx
  • To: TOPCOPS-L@xxxxxxxxxxxxxxxxxxx
  • Date: Thu, 22 Apr 2010 13:32:00 EDT

What Frannie doesn't say is that the City  hasn't paid it's share into the 
pension plans in over 10 years.  This story  sounds like a Daley plant to 
make us look greedy, lazy, money grubbing,  etc.
 
I did my part, over 9% of my salary goes  directly to the pension fund, the 
city is supposed to pay 9% into the fund in  lieu of paying FICA.  The City 
gets away without paying and then makes us  (the annuitants) out to be the 
bad guys.
 
 
 
We'll all feel pension pain 
Properly funding system will cost taxpayers, city  workers greatly 

 
BY _FRAN SPIELMAN_ (mailto:fspielman@xxxxxxxxxxxx)  City Hall Reporter  
fspielman@xxxxxxxxxxxx 
Chicago taxpayers will be forced to dig deeper -- and so will city workers 
--  to bail out four city employee pension funds that will run out of money 
by 2030,  a Mayor Daley-appointed commission has concluded. 
"There is no low- or no-cost solution to this problem. . . . Deferring 
action  is not a viable option," said a draft of the final report, obtained by 
the  Chicago Sun-Times.  
 
 

"We cannot invest ourselves  out of this funding gap. . . . Closing it will 
require substantial actions [in  three areas]: benefits, employer 
contributions and employee contributions.  Employer contributions need to be 
funded 
through real commitments, likely  including new revenue sources."

The pension commission -- co-chaired by Daley's current and former chief  
financial officers -- does not recommend a specific tax. But the need is  
staggering. 
The combined unfunded liability of the Laborers, Municipal Employees, 
Police  and Firefighters pension funds now stands at 42 percent, down from 62 
percent  just two years ago and 80 percent in 1996. 
To reach a 90 percent ratio over 50 years -- assuming annual investment  
returns of 8 percent -- would require $710 million more each year. Sixty 
percent  of that would come from taxpayers, 40 percent from city employees.  
Without benefit reductions, that would require the equivalent of a 52 
percent  increase in the city's property tax levy and 8 percent more from city  
employees. 
"The take-home pay of a $50,000-a-year [city] employee would fall by 
$4,000,"  the report states.  
With reductions -- everything from reduced maximum benefit and a higher  
retirement age to lower cost-of-living increases and a pension cut for new  
employees -- the annual gap could be reduced to $510 million.  
A two-tiered pension system for new and existing employees will "probably 
be  necessary," even though it "poses serious moral issues," could hurt 
employee  recruitment and "might be subject to challenge" in the courts, the 
report  concludes.  
The report suggests that higher contributions from both sides could be 
phased  in over a four- or five-year period, possibly coinciding with scheduled 
pay  hikes "so employees do not suffer a [cut] in take-home pay." 
"For the city, new revenue sources can be gradually phased in and taxpayers 
 given time to adjust. These advantages may make the needed changes more  
politically practical," the report states.  
In January 2008, Daley created a 32-member commission drawn from labor,  
business and banking to confront the pension crisis that's choking local  
taxpayers and gobbling up Chicago's annual property tax levy. Since then, stock 
 
market losses and the housing crisis have compounded unfunded liabilities.  
If the pension funds run out of money, Chicago taxpayers get stuck with the 
 tab.  
Last fall, Daley responded to the Chicago Sun-Times' "Pension Bonanza" 
series  by saying he would entertain myriad solutions to get the pension monkey 
off  taxpayers' backs.  
He cracked the door open to raising the retirement age from the current  
minimum of 50. He said he would consider raising employee contributions and  
implementing a two-tiered pension system for new and old employees.  
Union leaders have long opposed a two-tier approach on grounds that it 
would  create a caste system among rank-and-file members.  
======================================================================= 
CITY PENSIONS: WHO'S PAYING WHAT 

    Plan  Employees  Taxpayers  Total   Fire  $38 mil.  $82 mil.  $120 mil. 
  Laborers  $16 mil.  $17 mil.  $33 mil.   Municipal emp.  $126 mil.  $158 
mil.  $284 mil.   Police  $91 mil.  $186 mil.  $278 mil.   TOTAL  $271 mil.  
$443 mil.  $715 mil.   Source: 2009 figures from draft of city pension 
report  

=========================================================================  
 
BY THE NUMBERS 
 
50
Minimum city retirement age 75% 
Maximum benefit (of final average salary) 3% 
Cost-of-living increase (automatic, yearly)   $793 mil. 
Current annual pension contribution by Chicago taxpayers and city  employee 
 $14.5 bil. 
Combined unfunded liability of four city employee pension  funds    42% 
Year all four funds will run out of money   2030 
Combined ratio of unfunded liabilities  $710  mil.
Increased annual contribution required to reach 90 percent funding over 50  
years  Current employee contribution (of each paycheck)    9.125% 
Source: Draft pension report, city pension  data

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