Illinois Pension Problem is “Unfixable” – Civic Committee of Chicago Statement

16 Nov

On November 14, the Civic Committee of the Commercial Club of Chicago, which leads the effort to overhaul Teachers’ Retirement System and the state’s other pension systems, sent a letter to Governor Quinn that said that there is no solution to fixing the long-term financial problems facing TRS and the other systems. This is a quote from the letter: “Our latest sobering analysis has led us to conclude… that under current circumstances the pension system is unfixable.”

Despite the finality of this statement, the Civic Committee nonetheless proposed a series of changes they said would “minimize the long-term damage.”

“Eliminate all cost-of-living increases”

“Institute a pensionable salary cap”

“Increase the retirement age to 67”

“Shift annual costs to local employers over 12 years or more”

“Before undertaking these reforms, it is critical that the pension funds immediately lower their discount rate (investment return) assumptions… Moody’s has suggested the high grade long-term corporate bond index rate, which was 5.5% for 2010 and 2011.”

Answer: The Civic Committee’s statement is fundamentally untrue. The long-term TRS financial problem can be fixed. In fact, if current state law is left unchanged, in 34 years TRS will be 90 percent funded. This path, however, does require tough choices and regular and increased funding from state government and TRS members.

The Civic Committee’s statement never gives any evidence that the pensions systems are “unfixable,” but only that in the future the state will pay more every year for public pensions than the Civic Committee says it wants the state to pay.

The Civic Committee has always been clear that it wants less tax money spent on pensions so the funds can be spent on other priorities. They also have pointed out for years that the majority of citizens do not enjoy a public pension. These are quotes from the statement: More…

via TRS Issues and Answers: TRS in the News.

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