This is, in broad outlines, the content of a recent unpublished letter to the editor, my fix for the pension crisis in Illinois:<\/p>\n
First of all, existing accrued pension benefits have already been promised \u2014 these have to be maintained, just as in the private sector.\u00a0 <\/p>\n
What\u2019s more, it\u2019s been taken as a given that future accruals, under the same pension formula, are guaranteed by the Illinois constitution.\u00a0 But you know what?\u00a0 \u2014 Last year, there was a very convoluted constitutional amendment which attempted to rein in pensions.\u00a0 Fundamentally, we need a different, very simple amendment:\u00a0 \u201cthe State of Illinois is obliged to pay out pension accruals for benefits due to service already rendered.\u00a0 The state may, at its discretion, alter or cease pension or other post-retirement benefits for future service, without limitation.\u00a0 Nothing in this constitution shall oblige the state, or any entity within the state, to maintain future pensions under existing pension formulas and provisions.\u201d<\/p>\n
The next step is to get the government out of the pension business entirely \u2014 not necessarily by moving every state employee to 401(k)s but telling the public employee unions (SEIU, NEA, etc.) to step up to the plate and provide Taft-Hartley multi-employer plans for their members, for which the employer pays a fixed contribution and the union-run pension plan has the obligation to run the plan effectively \u2014 in this case, with the understanding that the state will not pick up additional costs for mismanagement or investment losses; these will have to come out of workers\u2019 paychecks.\u00a0 Existing accruals would be maintained in the manner of a frozen plan at any private-sector employer, with the added concession that these fixed accruals will be increased each year by inflation (or even average Illinois wage increases), and the state, over time, improves the funding level by dedicating boom-year surpluses (instead of spending the money on constituent-pleasing special projects).<\/p>\n
That\u2019s it!\u00a0 Though I\u2019m undecided on whether part II should be legislation or a further constitutional amendment.\u00a0 <\/p>\n
(By the way,\u00a0 I label this the \u201cif I were czar\u201d series well aware that Obama\u2019s \u201cczars\u201d are a touchy subject \u2014 but it\u2019s in homage to my dad, who likes to say this.)<\/p>\n<\/body><\/html>\n","protected":false},"excerpt":{"rendered":"
This is, in broad outlines, the content of a recent unpublished letter to the editor, my fix for the pension crisis in Illinois: First of all, existing accrued pension benefits have already been promised \u2014 these have to be maintained, just as in the private sector.\u00a0 What\u2019s more, it\u2019s been taken as a given that […]<\/p>\n","protected":false},"author":2209,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[450],"tags":[],"class_list":["post-929","post","type-post","status-publish","format-standard","hentry","category-actuarial"],"yoast_head":"\n