Chicago Fed Thinks It Knows How To Tax Illinoisans Fleeing Pension Liabilities (Madison: buy, calculator)

[Liledgy]

Originally Posted by MSchemist80

Even 8.2% won't be enough. Everyone agrees that the expected ROI on the pension funds are overly optimistic and the pensions are guaranteeing absolute returns (unlike 401k's) plus COL increases that likely won't pan out. John Bogle is predicting 4% average returns on the stock market for the next decade. Not to mention possible increases in life expectancy in the future.

https://www.cnbc.com/2017/11/20/jack...nd-beyond.html

Well, I’m sure it’s no different than what the IMRF projects for their returns, the difference being the employers haven’t skipped payments. Nothing to do with overly optimistic returns or colas or they would be in trouble too, which there not.

[RisingAurvandil]

Originally Posted by Liledgy

Indiana is “right to work” and they contribute 5.2% (or 5.5%), plus social security. Why can’t these supposedly “powerful unions” get that deal?

Regardless, wages are much lower in Indiana. 22% lower to be precise. According to Time, average teachcer salaries are as follows...

Illinois: 61k
Indiana: 50k

11k is large difference. 22% is a big difference, and would allow for a spectacular 401k to augment the pension and Social Security. So yes, Illinois teachers are better compensated than Indiana, on average.

[Liledgy]

Originally Posted by RisingAurvandil

Regardless, wages are much lower in Indiana. 22% lower to be precise. According to Time, average teachcer salaries are as follows...

Illinois: 61k
Indiana: 50k

11k is large difference. 22% is a big difference, and would allow for a spectacular 401k to augment the pension and Social Security. So yes, Illinois teachers are better compensated than Indiana, on average.

Take Two teachers making the same amount, one from Indiana and the other from Illinois. Indiana will pay over 11,5% into the teachers retirement, Illinois will put in 8.2%. And that’s on the tier one plan. Every educator hired after 2010 is on tier two, 40% lower than tier one. Indiana has a far better fully paid by the app mployer than those greedy union teachers from Illinois.
Oh, there is one educator (if you call him that) that is getting tier one benefits even though he was hired after 2010, your savior governor rauners hand picked president of education, Ruiner gives him an annuity for the difference between tier one and tier two. He must be union, lol.

[dtcbnd03]

Originally Posted by Liledgy

Really? I didn’t know it was that simple, all they have to do is “get angry and demand” and presto, the money for retirement is there. What’s the match on the 401k Einstein? I’m trying to figure out how the state will spend less than the 8.2% they are supposed to match now.

Notice you said supposed to match. But they don't. With a pension they chronically underfund and overpromise because the liability doesn't come until later. And no one can check an account balance to confirm or deny anything. That can't happen with a 401k. If my employer matches 6% they have to pay it into my 401k right away. And if they try to lower the match rate I would get upset because that's a pay decrease and I...along with other workers...would lobby against any matching decrease at the time it happens....not 30 years later after overpromises and underfunding happened and I realize the pension only has 30 cents on the dollar. In fact I can log into my 401k right now and filter to see my employer match portion...and that's real dollars in my account right now...not a fake promise.

So with 401k the ability to get an immediate match, check a REAL account balance (not a fake promise), and have the money under your own name/SSN so no one can touch it but you vastly outweighs any pension.

[Liledgy]

Originally Posted by dtcbnd03

Notice you said supposed to match. But they don't. With a pension they chronically underfund and overpromise because the liability doesn't come until later. And no one can check an account balance to confirm or deny anything. That can't happen with a 401k. If my employer matches 6% they have to pay it into my 401k right away. And if they try to lower the match rate I would get upset because that's a pay decrease and I...along with other workers...would lobby against any matching decrease at the time it happens....not 30 years later after overpromises and underfunding happened and I realize the pension only has 30 cents on the dollar. In fact I can log into my 401k right now and filter to see my employer match portion...and that's real dollars in my account right now...not a fake promise.

So with 401k the ability to get an immediate match, check a REAL account balance (not a fake promise), and have the money under your own name/SSN so no one can touch it but you vastly outweighs any pension.

Oh, you would get upset. Gosh, then you would lobby. You have a wonderful employer (I do too!), your getting over 12% from them, 33% mood re than the greedy teachers.
I’m well aware of 401k’s. I am fortunate I get both a pension and 401k fully funded by the contractors.
It cracks me up how you guys think the state will save money (and taxpayers) going to a 401k with social security. Hint, it’s gonna be a lot more than 8.2%.

[MSchemist80]

With a pension you are guaranteeing absolute returns and COLA's and depending on the govt to fund it appropriately for the "accurate" actuarial models. WIth a 401k here is your money, the govt paid it, the ball is in your court which is what the fed does with the Thrift Savings Plan for federal employees.

If Bogle is right that stock returns are going to be lackluster for the next decade or if there is a bear market that is going to scr#w the pensions even more.

[bobsell]

Originally Posted by Maintainschaos

I feel bad for the lion's share of government workers in Illinois who aren't raking in lavish pensions but are demonized by citizens of the state who think otherwise thanks to some skewed statistics from some right-wing nutrag like the Illinois Policy Institute.

People read the scandalous stories of the cronies who get nice paydays like this:
Former Chicago labor leader nets a $158K city pension - Chicago Tribune

(alternate link in case it is paywalled for you: Illinois Union Boss Collects $158,000 Per Year Government Pension for One Day)

One of 23 different union bigshots who got six figure paydays from the City of Chicago.

Then talk about the six tons of patronage employees who get pensions only because they're cronies. At the local, county and state level. At the state level, both parties use the Illinois Tollway to put their cronies on the payroll for juicy paydays.

So no wonder people look askance on the pension mess. They see the egregious abuses and think this is normal.

In addition, take all the pension money that's going to cronies and you'll see why we have a big mess. The ordinary workers who are working for the government are not to blame for the mess - the politicians and their cronies are to blame.

[Mathguy]

Originally Posted by Liledgy

Mathjack, I respect the heck out of you so no offense taken. But, how is the state being generous with an 8.2% contribution to the teachers pension? They don’t get social security which would be 6.2%, so are you saying a 2% increase from the what they would have to contribute to SS is generous? Indiana is “right to work” and they contribute 5.2% (or 5.5%), plus social security. Why can’t these supposedly “powerful unions” get that deal?

Actually exemption from social security would likely leave you well ahead if you throw the money you would have had to contribute yourself into an investment vehicle and are making good wages like in the Chicago metro.

Social security has a declining wage return meaning that 30k earners don’t get half what 60k earners do and so forth.

The average pension of someone drawing from the teachers pension after a full career teaching is 75k or so. Throw in a million from forty years of ira or 401k accumulation of not paying soc sec and even without ss you’re looking at 100k a year retirement

[Mathguy]

One big problem is also that the pension group and teachers unions put out “facts” like the average pension is only 46k. That number includes the people that only taught 6 years etc etc in order to skew the number lower.

Also referencing not getting to collect from social security but not mention the not having to make the employee contribution.

Basic political crap and not being transparent about the issue.

[RisingAurvandil]

Originally Posted by Liledgy

Take Two teachers making the same amount, one from Indiana and the other from Illinois...

Why? You can't disregard the facts. Teachers in Illinois are paid far better than Indiana. 22% better on average, which more than compensates for any retirement benefits that Indiana may offer.

Furthermore, the utility of money is greater in a teacher's younger years. They are still young enough to climb mountains, raise kids, build a 401k, earn a masters, etc. Retirement money is nice, but it's not as valuable as present-day money.