The IL House Pensions and Personnel Committee DID pass SB512 House Amendment #2 with a 5 - 4 vote yesterday. The full House might vote on it soon, or maybe next session. In any case, we need to call Bost and others now. This website tells more: http://suaa.org/
This is really scary! Here is the message I sent to inform people:
Colleagues
I just called Bost's office at 217-782-0387 and they're taking a tally of people opposed to this draconian House Amendment 2 to Senate Bill 512 to destroy our pensions. It might come up soon for vote so I urge you to call and make it flood of opposition.
Basically they are proposing to increase our contributions from 8 to 17% and then reduce our defined benefit to the MINIMUM Social Security payment! So instead of the 80% of our final salary, which we've always had, we'll get about 20% and have to pay the whole amount (no employer contribution). Please inform others and let your voice be heard!
Here's the IEA webpage on this issue, with further details, and more instructions on who we can help defeat this unjust and unconstitutional measure together.
Well, there is only one clear option: STRIKE!!!! Especially now that we have the university and BOT right where we want them.
ReplyDeleteYikes. No rest for the weary I guess.
ReplyDeleteI just called Bost's office myself per your suggestion. Good(?) news is (from the woman I spoke with) was that it was being held on the floor because the speaker doesn't think he has the votes. I think they've already left. Anyway Bost is already against this, but I'm sure it doesn't hurt to hear from as many as possible. That is some draconian s***.
They are adjourned until 11/29. You should still call, but you can sleep first. NIU has a good analysis. It is bad, but not quite as dire as set out above. http://www.niu.edu/statebudget/pension_reform/index.shtml
ReplyDeleteNIU generally has good information on state budget issues here: http://www.niu.edu/statebudget/
Quick, call the FSN! No, um, the AAUP, maybe. No, they can't do much. Hmm? Who can deal with this on a state wide basis? Who has the resources, knowledge and experience? Who?!?
ReplyDelete@ Mike:
ReplyDeleteActually... Glen Poshard. (Sorry, couldn't resist).
beezer,
ReplyDeleteNo, that's is a very good point. This is a area where there is common ground.
FWIW, Glenn Poshard and Others in the administration have been working on this for months. You can read their reports in the BOT minutes and in (some) of the Senate minutes. I am not saying that this is not important or serious, just that this is not something that has just come up. And Jill is correct, some of what Dave posted is not accurate.
ReplyDeleteAnd what a wonderful chance for the FA and the Administration to get on the same side and try to defeat a common threat to us all. And one that is quite likely illegal under the Illinois state constitution.
ReplyDeleteOur Sen. Dave Leuchtefeld confuses TRS (Teachers Retirement System) with SURS and thinks that the dire financial situation of SURS is only partly due to the State of Il never contributing its required share, but mostly due to generous early retirements and mismanagement of funds. That's true for TRS, but not for SURS.
ReplyDeleteI spoke with SURS people and apparently neither assertion is correct. SURS is well run and its underfunding is due to the state never paying its share.
Call Leuchtefeld and set him straight.
217.782.8137 (Springfield)
618.243.9014 (Okaville, where he lives)
Same for Bost.
The problem is also the pension formula assumed high rates of return? Why? So that the legislature could pay LESS in anticipation of those high rates of return.
ReplyDeleteAs a mid-career person, I just don't see myself NOT getting screwed in the next 15-20 years. Too many boomers in front of me. Who cares about any one under 50? With SSA, the spiel always is "we have time - 25 years - to get this right." Then 25 years passes and we have massive debt and I see the SSA commissioner saying "we have another 25 years. . . " Sigh. Well, the day of destiny is here. Read _Coming Generational Catastrophe_ (2d edition). Dems and GOPers in DC think "reform" means eliminate or drastically reduce benefits for those under 55 and throw all the money at those in the system.
But Illinois is a cautionary tale for the rest of the nation. "Canary in the coal mine" is apt given we are in coal mining country! At the very least, the new bill has me pay 17% (!) of my salary rather than the 8% or so now. Then they will "adjust" the formula (not in my favor), tax the benefits, etc., etc.
New hires, of course, are completely screwed (our graduating students). One of the sleeper clauses is their pension is capped at $106K, "with increases provided annually to be the lesser of (i) 3% of that amount, including all previous adjustments or (ii) one half of the annual unadjusted percentage increase (but not less than zero) in the consumer price index." Translation: $106K 40 years from now will be worth a fraction of that in today's dollars. I ask people who are over 50 what they think and they say "it is 'fair' - no one should receive pensions more than that" (politics of envy) until I pointed out the effects of inflation over the past 30 years of THEIR career. "Oh," they say, "I guess it is more complicated."
But here is my take away, as someone who joined SUAA and keeps on top of this issue: the bill keeps getting more and more *complex,* even difficult to understand for close followers. They say our traditional benefits earned to date are preserved but what does that mean? In today's dollars, according to the formula applied X year when he retire, etc. As SB 512 gets more and more complicated the "spin" will start after the fact and people - except those very near retirement - will have no idea they are being taken to the cleaners.
Of course, every terrible thing is a "teachable moment" (God save us from "teachable moments"!). It is a good time for discussing a collection of essays I am assigning in my honors class next semester: _Dissenting Electorate: Those Who Refuse to Vote and the Legitimacy of Their Opposition_.
Prof. Bean, is it me or is this bill *worse* than the last attempt to fleece our pensions?
ReplyDeleteWhile the Pollyanna in me would be content to sit back and assume the constitution will protect us ad infinitum, the realist tells me that that tact will leave my family and I wearing barrels and suspenders by the time they get done with us.
I certainly agree with the sentiments of Mike, Joe et al. that the silver lining in all of this might be the opportunity for all stakeholders on campus to heal by working together on this issue long term for the benefit of all.
For example, instead of our current collective tactical position (always playing defense against the next cockamamie scheme thought up by our friends in Springfield, hoping the political forces we can muster stalls the scheme to death somehow—until the day comes where we fail and get crushed by a bill like this one), maybe we could conceive of a solution that (1) might at least be tolerable (if a little painful); (2) can get buy-in from stake-holders across the state; thereby (3) giving the politicians something else to choose besides doing nothing and doing something terrible.
Am I correct in assuming this mainly affects the "traditional" plan and not those who are in the 401k-like plan?
ReplyDeleteYou folks should choose the self-managed plan.
ReplyDeleteMr. Bean is correct. Those of us under 50 have no pension to look forward to. For me and my family this is just another reason to move on now before it is too late.
ReplyDelete@ Anon. 9:48. Certainly not before, but maybe now (I chose 'portable' because I didn't know where I would be in the future, and I didn't want self-managed because I don't know anything about investments and I don't have the time to learn properly--besides, over the last 10 years I think self-managed plans have done very poorly--a self-manager would probably have done better in CDs, and maybe even with lottery tickets. But at least what they have is theirs!).
ReplyDeleteAssuming something like this survives and a gun is to my head, I'll certainly take a 2nd look at SMP. It would be (ahem) "interesting" to see how much of my ostensibly accrued benefits would be monetized in real dollars for an allowed transfer to real accounts (coming out of their former meager existence as virtual electrons). In any case I expect matching contributions will go down regardless of plan, but maybe not.
@ Anon. 10:15: Where would you go? This is a national problem. IL may be one of the first to try to come to grips with the problem, but there aren't exactly a lot of retirement utopias (with clear skies on the horizons) out there.
I chose SMP four years ago because even then, I didn't trust Rod Blagojevich with my pension money. I took a bath during the crash in 2008-9, but most of my investments bounced back. TIA-CREF has a wonderful investment tool called a Lifecycle Fund; I chose Lifecycle 2040 because I am currently 35 and will be retirement age roughly 30 years from now. Even with the return of the bear market this spring and summer, I have nearly $40k in my pension fund from only 4 years at SIUC so far.
ReplyDeleteThe point is, the fund managers have everything calibrated according to a system geared to your age and how many years you have before you will need the money. I believe it is 90% stock and 10% cash/bonds, with 65% allocated to domestic and 25% to foreign stocks, but I could be wrong.
beezer, my returns over the last 10 years are about 7-8% using the self-managed plan. And that is not bad at all given the post-9/11 recession and the huge hit in 2008 with the housing crisis (portfolio down 35%!).
ReplyDeleteIt is not that difficult to do (your choice of investment vehicles is fairly limited), and more importantly, you are not at the mercy of the state legislature. Now, there is certainly more risk involved, but I trust myself more than I do those who run this state.
I second success on the self managed plan, compared to loosing it if I leave SIU or the pension plan goes belly up. You can do very generic managed investments.
ReplyDelete@ previous posts:
ReplyDeleteWell! Ok, those numbers sound pretty decent, thanks (maybe some of the people I know with SMP aren't so good at the "manage" and the "plan" parts).
Ok, Ok, particularly if it is not so hard to do, if given the (ahem) "opportunity" to choose again, I'll definitely take a close look.
(Maybe all the scary stuff in the SB is just a psych ploy to push people out of the defined-payouts plans anyway). Still, I'd wonder what will happen to the size of employer matches in the future...
After the various stock market crashes, I had thought my choice (in 1998) to adopt the SMP was foolish--so I'm glad to see it may be less foolish than trusting the state. (I chose the plan in part because the market was booming, I enjoyed playing around with investments, and I did even then have a dim sense that it would be hard for the state to take away money it had already given me to invest.)
ReplyDeleteOne problem for folks, though: in 1998, at any rate, I was told that my choice was irrevocable. Are they going to allow people to switch to SMP? That *might* be a reasonable solution, though I do think that the state's inability to uphold its promises on defined benefit plans is deeply disturbing. Given the rather slow rate at which my investments have increased, I think I may well die with a piece of chalk in my hand, teaching ancient history to students who suspect I may well have known Socrates personally.
The IEA is trying to fight this battle on our behalf, something I think is worth reminding folks of. If your union dues help that fight, they may prove to be a very good investment.
Finally, I second the thoughts of those who recognize that this is something that unites faculty and administration, and hence could help promote healing on campus.
I have the SMP, for similar reasons as Joe. When I got here 5 years ago and saw the unfunded pension liability of the state, I suspected the legislature would eventually kill the golden goose. I do feel it is morally wrong for legislative bodies to do what the Illinois General Assembly and many other state legislatures have done by breaking pension promises or borrowing money from pensions they cannot repay to fund other priorities. But given what has happened in the private sector to defined-benefit pensions, I think their demise in the public sector is an unfortunate inevitability. And at some point, the text of the Illinois Constitution regarding pensions will have to yield to fiscal reality, I fear.
ReplyDeleteBeing in the SMP is scary when the market is down but not so bad when it is doing well. I feel it gives me the flexibility to leave when or if I need to, as well as the possibility of a better retirement than I might otherwise have had. But the thought of eating cat food in a hovel in my old age is a bit frightening,
I agree with Dave and others that this issue could perhaps help us heal on campus. I teach at the law school and am not part of the bargaining unit, but I must confess I neither understood nor supported the strike. And I thought that the administration, particularly through the chancellor's incendiary emails, handled things badly and made the situation worse than it needed to be.
Nonetheless, now that it is over, it's important for everyone to come together. It would be a good thing if this issue could help. And I would note for the record that throughout the labor dispute, it does appear that the chancellor and president have been involved in advocacy for this issue at the state level.
Haven't had any chance to read or post for days. Just read a few hundred posts. Gotta agree to healing; gotta agree to more conversations about what kind of collective bargaining we want; gotta agree about getting our voices heard in Springfield; gotta agree about SMP (not too good at it myself, but that's what I've got).
ReplyDeleteThe nature of this discussion is interesting. One of the challenges I, along with others I assume, have with the FA is that it is somewhat costly each year yet the organization only seems to be heard from once every four years (I guess more frequently given the duration of negotiations). There is rarely any word from them in between.
ReplyDeleteThe discussion here is exactly the type of thing I would have hoped from a faculty "union"-- a discussion of issues that affect us, in this case our retirement. Imagine a prospective hire being able to peruse the FA website to see ongoing discussions on a range of topics including retirement. That way, when they make something like the irrevocable choice in a retirement plan they have more information that just what HR tells them. They have the collective wisdom of colleagues from within their department, college, and university. This is where the faculty association, in my opinion, can demonstrate its worth beyond contract negotiations. I appreciate this discussion. It is nice to see that others selecting the SMP had the same thoughts I did half a decade ago.
As a member of the executive committee of the State Universities Annuitants Association (SUAA), I can fill in some information on SB512, including House Amendment 002.
ReplyDeleteUnder this bill, if you started at SIUC before January 1, 2011, you can keep your current benefits, but you will pay significantly more to do so. Your pension contributions will increase from 8% to 17.31% Therefore, being in Tier 1 will probably become unaffordable. If you don't want to pay this higher contribution rate, you can go to Tier 2, which in general will require you to work longer, retire later and receive less cost-of-living adjustments. If you started working after Jan. 1, 2011, you are in Tier 3, which is basically a 401(K) style defined contribution plan.
All of this becomes effective July 1 of 2013. So before that date, current employees will have to make a one time irrevocable election for either the traditional benefit plan (tier 1), a revised benefit plan with minimal pension benefits (tier 2) or a self-managed plan (tier 3).
SUAA's contract lawyer is of the opinion that House Amendment 002 to SB 512 violate the Pension Protection Clause of the Illinois constitution. It diminishes and impairs the benefits guaranteed to university employees and other state employees.
IEA, AFT and AFSCME are fighting hard on this issue to protect your pensions and benefits. TRS (Teachers Retirement System) did an actuarial study of the bill and concludes that the bill will add an extra $62 billion to the pensions systems over the next 30 years.
AFP (Americans for Prosperity) and the Civic Committee of the Commercial Club of Chicago have put $15 million into getting this bill passed. It is rumored that the Koch brothers are the main source of this money.
SUAA is the major organization that is fighting this bill. For those of us already retired, there will be no changes, but for those who plan on retiring, there may be huge changes.
The bill didn't make it to the floor.
This bill could come up again on November 29, when the so-called veto session meets again for one day. Most likely, if it gets to the floor, it will be in January.
Two imperatives: Let your state senator and state representative know how you feel about this bill. And, join SUAA. (Go to suaa@suaa.org.) The more we can argue that SUAA represents current employees, the stronger our already strong voice.
Here is a link to the text of the bill (I believe the relevant version is House Amendment 2 to SB512) http://ilga.gov/legislation/97/SB/09700SB0512ham002.htm
ReplyDeleteAnd yes, people may elect to change plans. I haven't read thruogh the legislation yet, and it is unclear to me whether there are multiple opportunities to change plans or only one opportunity--but there is at least one.
I wonder how many in this discussion are FA members, or other faculty that have been contributing and viewing this blog with regard to the negotiations and strike. Perhaps this is what a more inclusive faculty body looks like.
ReplyDeleteAnonymous 4:13pm I see this as a wonderful opportunity for all of us, Glenn Poshard, faculty who striked, faculty who did not strike, etc., to roll up our sleeves and join in a collective effort to protect our pensions against corrupt politicians from Springfield. I am going to be joining SUAA right now!
ReplyDeleteThank you Speaker Madigan for coming up with an issue to help all of us heal from the Great Strike of 2011!!!
Just checked on the SUAA website: for SIUC members to join, annual dues are $31 and there is a payroll option of $2.58 per month. I just opted for SUAA to mail me out the paperwork so I can begin having SURS do the monthly payroll deduction.
ReplyDelete