Tuesday, November 22, 2011

Bruce Appleby on Pension "Reform"

After the break, Bruce Appleby, vice-president of the SIUC Annuitants Association and a member of the SUAA (State Universities Annuitants Association) reports on recent developments in Springfield. Among other things, he urges folks to join the SUAA.  Dues are all of $32 annually.   [His message reached me via Mary Lamb and the Faculty Senate listserv.]

What’s Happening in Springfield 

     During the veto session in early November, the House Personnel and Pension Committee approved Senate Bill 512, House Amendment 002.  The bill did not make it to the House floor, though there is the possibility it will be voted on in the House on November 29, 2011. (I’m writing on November 20.)
     The bill sets up a three tier retirement system.  If you started working at SIUC prior to January 1, 2011, you can keep your current benefits, but you will pay significantly more to do so.  Your pension contribution will increase from 8% to 15.31%.  The plan freezes an employee’s traditional pension benefits earned before July 1, 2013.  After July 1, 2013, employees who stay in the traditional plan will earn a benefit equal to the minimum guaranteed under Social Security, which maxes out at $1187 per month.  (I am unclear on this provision.  Go to http:www.ssa.gov/cgi-bin/smt.cgi  for a better discussion of this part of the bill.)
Being in this group (Tier 1) will probably become unaffordable.  So, 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 smaller cost-of-living adjustments post-retirement
If you started working after January 1, 2011, you are in Tier 3 which is a 401 (k) style defined contribution plan.  And the retirement age is raised to 67.
     All this would take effect July 1, 2013.  Before that date, current employees will have to make a one  time irrevocable election, choosing 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 Senate Bill 512 violates the Pension Protection Clause of the Illinois Constitution.  It diminishes and impairs the benefits guaranteed to university employees and other state employees.
     Another aspect of Senate Bill 512 could mean that public employees would no longer make their pension contribution on an after-tax basis.
     All this is complicated and quite difficult to totally understand.  House Amendment 002 is a 313 page documents that may contain errors and omissions.  To further complicate all these issues, the re-districting of the state legislative districts means that all legislators will be up for re-election in 2012.  The March, 2012, primaries are creating a high degree of urgency in Springfield.  The deadline for filing petitions is almost here and there will most likely be a large number of challenges to the petitions.  Commitment to any aspect of these bills could be dangerous for anyone seeking re-election.  And those of us in SURS are a small number compared to those in the Teachers Retirement System.  Teachers as a group vote more than nearly any other profession.  This fact is not lost to a legislator.
     TRS (Teachers Retirement System) did an actuarial study of Senate Bill 512 that concluded the bill would not save the state money but would cost an additional $62 billion over the next three decades.
     The IEA, AFT and AFSCME are strongly opposed to these bills and are encouraging their members to contact legislators and let them know of their unhappiness with the bill.
     AFP (Americans for Prosperity) and the Civic Committee of the Commercial Club of Chicago are pushing strongly for passage of the bills.  An unconfirmed rumor around Springfield is that the Koch Brothers (infamous for their efforts to de-unionize public employees in Wisconsin) have put $15 million into getting these bill passed.  The Civic Committee ran newspaper ads against those Republicans who are opposed to the bills.
     Perhaps most frightening about these bills is the effect they could have on all campuses in terms of potential early retirements of those currently working .  If these bills were to pass, it is feared that hundreds of current employees will retire as soon as possible. The presidents of all the state universities in Illinois have written a joint letter to the legislature addressing the fear of significant “brain drain.”  There is fear that no campus would be able to recover from the number of personnel who will retire if Senate Bill 512 passes.   This applies to people in all categories of employment:  civil service, administrative/professional and faculty.  As stated above, the unions are actively and strongly opposing these bills.
     For those of us already retired, there will not be any major changes in our pensions and benefits.  However, there is a strong possibility that we will be made to pay a part of our health benefits.  Senate Bill 175 (or successive legislation) would establish a schedule of health insurance premiums for state retirees.  The State Universities Annuitants Association (SUAA) is opposing the current language of the bill and any revisions that do not ensure the equitable and fair treatment of pre-1980 retirees and SURS retirees who are not eligible for Medicare coverage.
     An additional bill to follow is HJRC 005, which would authorize a constitutional amendment that, if successful, would amend the Illinois Constitution to require a 3/5 majority in each of the houses of the General Assembly to approve legislation that would increase future pension benefits of employees of state and local governments as well as those of school districts. 
     SUAA’s lobbyist reports that as these bills progressed, contacts with Democrats in the legislature indicated “flat out” opposition.  It appears that the Republican caucus did not want to push the legislation,  although there was time to call the bill for passage during the veto session.  He anticipates that there will be no attempt to push the bills during 2011, although the legislature does reconvene on November 29, 2011.   He also was gratified to have the strong response for our membership and the leadership of SUAA.
     It is imperative that all members of SUAA let their legislators know of their strong opposition to these bills.  Those of us already retired will see minimum effect on our pensions and benefits during this process.  Those currently working will see major impacts on their pensions and benefits.  Those of us already retired must encourage our friends who are still working to let their legislators know how they fell about these bills.  SUAA is the major voice in Springfield opposing and leading the opposition to these bills.  The more members of SUAA, the stronger our voice.  We must get current employees to join SUAA and let them know they can join and have a dues deduction.  Tell them to go to suaa@suaa org and to join.
       And we must all let our legislators know of our feelings about these bills.  If you call 888-412-6570, you can be directly connected to your legislators in Springfield.  This newsletter has even better details on how to contact legislators.


  1. The Koch "rumor" is priceless. Wish you would have thought about that one during the strike. Here's a tip: Dick Cheney supports the bills, too.

  2. When I was in Alaska this summer at the UA (Fairbanks), faculty there discussed with some distress the recent creation of a similar three tiered system. It sounds like a disaster. And this from one of the few states currently well in the black, financially. One of the impacts has been considerable difficulty getting quality faculty to come to UA -- although, admittedly, Alaska needs a few more incentives to intice academic professionals to relocate there than do most universities in the lower 48.

    So many are willing to justify these sorts of measures by claiming the economic times necessitate such austerity measures. The question we should be asking is why these particular measures and not others. It's not like our state pension system is overly generous as it currently stands. Again, those who challenge this pension reform are challenging the state's (and the lobbyists') priorities. There is a clear link between anti-union and anti-public sector employees rhetoric. The radical neo-liberal agenda is taking advantage of an economic climate it was largely responsible for creating to continue pushing "reforms" central to that agenda.

    But yes, the good news is that folks most recently on opposite sides of the strike "fence" should find common ground with this issue. And already our anonymouses here reveal that some (many?) in the opposition to both issues do so from a sweeping and naively reductive ideology.

  3. All FA members should join SUAA and participate this campaign.

  4. $33 dollars /yr can provide a significant benefit.
    Dear members, stand out and help!!!!

  5. I already lost five day's pay. I don't want to invest on something which is very uncertain.

  6. Anyway, the state is broke. No matter how many of us join the SUAA, it won't help. To cut the retire benefit deems to occur. Thus I decide to retire next July. Good luck to all of you!

  7. To the anonymous one who is going to retire in July: check it out. July 1, 2012, brings in changes to the retirement benefits. Don't wait until July. Do it June 30, 2012.

  8. Thanks for the information. I have made an appointment with HR to discuss the detail.


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