Chicago mayor pushes for pension reform

Rahm Emanuel

By Andrew Thomason
SPRINGFIELD — Chicago Mayor Rahm Emanuel today called for pension reform during his first official visit to the Illinois General Assembly.
The first-term mayor laid out a plan to fix Chicago's pension funds, which are unfunded to the tune of $20 billion, about 46 percent.
Emanuel said during an Illinois House Personnel and Pensions Committee hearing that he wants to stop, for a decade, cost-of-living-adjustments for current retirees.
"We need to hit the pause button, so the entire system can catch its breath," Emanuel said.
Retirees get a compounded 3 percent increase on their pension payments annually; after 10 years, an employee's pension payments increase by 30 percent.
Emanuel wants to increase the retirement age by five years for the city's retirement systems and asked that employees kick in 1 percent more to their pensions every year for the next five years.
Current retirement age and employee contribution levels differ between the city's various pension funds.
Changes to Chicago's public pensions need lawmakers' approval, because their basic framework is built into state law.
Emanuel's plan has similarities to one Gov. Pat Quinn laid out several weeks ago for fixing Illinois' ailing pensions, which have an unfunded liability of $83 billion.
Quinn wants to cut cost-of-living increases for state retirees and make employees choose between paying more into their pensions or losing retiree health benefits.
Illinois House Republican Leader Tom Cross, outspoken about pension reform over the past few years, said he likes Emanuel's and Quinn's ideas.
"We have a lot of work to do in the next couple of weeks to get this done, and we need to get it done," the Oswego Republican said.
He said neither Emanuel nor Quinn have put their ideas in legislative form.
House Speaker Michael Madigan, D-Chicago, said Emanuel's willingness to tackle Chicago's pension problems helps move forward pension reform at the state level.
The public sector unions are calling Emanuel's plan "disappointing."
"Mayor Emanuel is wrong to propose that city employees and retirees should now be forced to bear the lion's share of the burden for fixing a system damaged by shortsighted politicians and reckless Wall Street speculators," Henry Bayer, executive director for the public union the American Federation of State, County and Municipal Employees Council 31, said in an email.
AFSCME also has come out hard against Quinn's proposed pension changes.
Bayer says the average pension for most AFSCME-represented Chicago retirees is just $31,000 a year.  And that modest amount is all they have in retirement," he added, "because unlike every private citizen, city employees don’t receive Social Security."

Comments

Compounded pension increases

"Retirees get a compounded 3 percent increase on their pension payments annually; after 10 years, an employee's pension payments increase by 30 percent."
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Actually if componded would be 35% [1.03^10]
For some of the recently reported [different group] of 4% would be an increase of 48% after 10 years.