ILLINOIS - Pension Law, State Supreme Court Decision

"How will the Illinois pension law rejection affect other states?" PBS NewsHour 5/10/2015

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SUMMARY:  On Friday, the Illinois Supreme Court voted unanimously to strike down a law passed in December 2013 that was meant to rescue the state's pension system.  For more on the implications of that decision Karen Pierog of Reuters joins Hari Sreenivasan from Washington.

HARI SREENIVASAN, PBS ANCHOR:  There was an important court ruling on Friday.

The Illinois Supreme Court voted unanimously to strike down a law passed in December of 2013 that was meant to rescue the state’s pension system.

For more about the implications of that decision and what it could signal for other states, we are joined now from Chicago by Karen Pierog.  She has been covering the story for Reuters.

So, bring us up to speed here.  If somebody wasn’t paying attention to what the law was in 2013, what did it try to do?

KAREN PIEROG, REUTERS:  Well, the law was aimed at trying to ease Illinois’ $105 billion unfunded pension liability, and also to lower the annual amount of money that Illinois has to pay towards pensions every year.

And Illinois has had a structural budget deficit for decades.  And it’s — it’s — it was having a very hard time trying to come up with money, you know, to pay for essential state services.

HARI SREENIVASAN:  At the time, the legislature said, this is an emergency, a fiscal emergency, they need to act, it is almost like putting out a fire.

They took certain steps, like increasing the retirement age, suspending cost of living adjustments.

MILITARY - Repeal of Military Pension Cut in New Budget

Disclaimer, being retired U.S. Navy I have a big stake in this issue, even though I'm 69.  My Navy retirement pay is the biggest contribution to my retired income.

IMHO if Republicans push FOR the cut they show their true colors on "supporting our troops."  The proof that EVERYTHING is measured on 'if we can afford it' aka focus on money before people.

"Should lawmakers repeal cuts to military pensions?" PBS Newshour 1/2/2014

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JUDY WOODRUFF (Newshour):  When Congress reached a budget deal last month to fund the federal government, one of the controversial things they agreed to do was to reduce the cost of living adjustments for retired military personnel.

This has set off a battle over pensions with some members of Congress who have vowed to repeal this provision.

Jeff is back with that.

JEFFREY BROWN (Newshour):  The new pension cuts affect military veterans under age 62 who've retired after serving 20 years or more in the armed forces.  They would see their annual pension increases trimmed by 1 percentage point.  Authors of the budget deal say this would save $6 billion over the coming decade.

And we take up the matter now with retired Vice Admiral Norbert Ryan, president and CEO of the Military Officers Association of America, and Lawrence Korb, former assistant secretary of defense during the Reagan administration.  He's now a senior fellow at the Center for American Progress.

AMERICA - Should Pensions Be Part of Debt-Shedding

"Chicago Pursues Deal to Change Pension Funding" by RICK LYMAN, New York Times 12/5/2013

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First came the State of Illinois, now comes the City of Chicago.

The hard-fought passage here Tuesday of a landmark bill trimming retirement benefits for state workers, aimed at fixing the vastly underfunded pension system, has become instantly relevant to the nation’s third-largest city, which has its own pension systems in various stages of financial collapse.

And if anything, the reckoning in Chicago is even nearer and more difficult than the one the state had faced, putting its Democratic mayor, Rahm Emanuel, in a difficult position under a tight deadline.

Under state law, the city must increase its contributions to its workers’ pension funds by $590 million in 2015, to a total annual contribution of $1.4 billion for current and future retirees.  If no pension deal can be reached by November of next year, when the city will draft its next budget, the city will either have to raise taxes or cut services or some combination of both.

But city officials are hoping there is now momentum on their side to force a compromise solution.  They come armed not only with Tuesday’s state vote but also with a federal judge’s ruling, also on Tuesday, to formally send Detroit into bankruptcy.  Chicago is not facing bankruptcy, but the Detroit case produced a development being watched closely by cities and unions across the country: It explicitly permitted changes to public pension funds to help the city shed its debts and reorganize.

"States and cities grapple with cuts to pensions that workers have already earned" PBS Newshour 12/4/2013

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SUMMARY:  Illinois joined other cities and states in cutting pensions as way to curb costs.  Should public employees who have already earned their retirement be subject to cuts?  Judy Woodruff talks to Andrew Biggs of the American Enterprise Institute and Steven Kreisberg of the American Federation of State, County and Municipal Employees.

NETHERLANDS - Do They Have a Pension Problem Solution?

"Do the Dutch have the pension problem solved?" PBS Newshour 11/10/2013

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SUMMARY:  As cities and states across the U.S. grapple with their pension programs, we travel to one country -- The Netherlands -- that seems to have its pension problem solved.  Ninety percent of Dutch workers get pensions, and retirees can expect roughly 70% of their working income paid to them for the rest of their lives.

"Justin Fox on “why retirement risks are best shared” PBS Newshour 11/10/2013

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SUMMARY:  Justin Fox, the Executive Editor of the Harvard Business Review Group and author of "The Myth of the Rational Market" has studied the Dutch pension system extensively.  He discusses what aspects of the system -- mandatory savings -- annuitized payments -- national pools -- might work in the U. S.

ECONOMY - Looking Up for Pension Funds and Retirees?

"Banks Poised to Pay Dividends After 3-Year Gap" by NELSON D. SCHWARTZ and ERIC DASH, New York Times 1/13/2011

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Investors in bank stocks are about to get a big cut of the profits again.

Financial analysts say the nation’s largest banks are ready to begin restoring their dividends in the first half of the year, after a three-year pause to repair their damaged balance sheets. The reversal could put billions of dollars in the pockets of pension funds and retirees who had viewed bank shares as dependable sources of income.

Clues to how big a payout is in store could come as early as Friday, when JPMorgan Chase announces its 2010 financial performance, the first of many earnings reports to come over the next week from the likes of Bank of America, Citigroup, Goldman Sachs and Wells Fargo.

If the big banks deliver a second straight year of rising profits, as many analysts expect, the conditions would be in place for regulators to approve dividend increases by as early as March.

POLITICS - Phasing Out of Pensions

I watched an interesting segment on PBS's "The NewsHour" the other night.

It includes a section on "Analyzing pension changes" which was a discussion with Karen Friedman, policy director for the Pension Rights Center, an employee and retiree advocacy group; and James Klein, president of the American Benefits Council which considers pensions from the employers' point of view.

Well, part of it is a reflection of the changing nature of the employer, employee relationship and it is just one manifestation of that. Another aspect of it is it has become increasingly more difficult to sponsor these plans.

There is, I have a lot of member companies who tell us, you know, we sponsor a pension plan; we expect it to be a very expensive proposition. We don't have a problem with that. What we do have a problem with is the unpredictability of not knowing what the new rules are going to be with respect to funding and other things of that nature.

Klein

Anyone who has had a job in the last 10yrs knows that old-style pension plans (such as IBM's) are going away and the 401k plans are taking their place, but there's a problem.

And so while 401(k) plans are good as supplemental plans, they were never meant to be the whole plan that people used to save for retirement. So what we are seeing is over the last ten to twenty years a gradual move or gradual shift from these good traditional pensions that provide employer-paid benefits, that employ a guarantee stream of income to this do-it-yourself society.

Well, at the same time that's happening we are asking people to save more for their retirement, we are asking them to save for their education. We are asking them to save for health care. How much can individuals save? Right now just to put this into perspective, the median account balance of 401(k)plans in this country is $15,000. And the median account balance for those between 55 and 65 is only $23,000.

Friedman

In other words, just how much can the average low to middle income family have to save in a year for everything the Republicans and business want in this "do it yourself" society? With all the monthly living expenses (home, utilities, food, cloths, children, etc.) how much is actually left to put into all the programs they expect families to save for? Not much, if any. There's the Catch-22.

Republicans: Another example of favoring the rich. Sure, if you are rich you can afford to save to these programs. No problem. I recognize that this is why people want to be rich, but do we want a society that does not provide a level playing field for everyone?

Business: Lets face it, Wallstreet worships at the shrine of greed. Anything to gain ever bigger profits. This is the essence of greed, never being satisfied with just making a profit, but that you must have bigger profits every period (quarter, semiannually, yearly). It's not the little orphan asking, "Can I have more, please?" for porridge; it is the big, fat orphanage board member, with his table overflowing with food, saying, "I want more Prim Rib, lets cut the orphan's ration in half so we can buy more." Reminder, greed is one of the "7 deadly sins."

What we, as a society, have to decide is; just what do we want the USA to be. A society which has no responsibility to the "little" guy but has a big responsibility to protect the "big" guy? Or a society that protects both equally?

You decide, then take whatever action you deem necessary to make the USA the society you want. Just remember, you're not the only citizen, and all citizens have the right to petition the government (local, state, federal) to execute their wishes.