Breaking News Bar
posted: 5/12/2013 5:00 AM

Morrison: We must rethink old ideas about retirement

hello
Success - Article sent! close
  • Tom Morrison

      Tom Morrison

 
By Tom Morrison

As a citizen of Illinois, I am tremendously grateful for the service provided by public sector employees. They have dedicated their careers to keeping us safe, educating our children and working to maintain the infrastructure we rely on as we go about our daily lives.

Unfortunately, as House Speaker Michael Madigan admitted last week, he and other lawmakers -- with help from union bosses -- have legislated over the years without regard for fiscal realities. By these actions, they have abused taxpayers and have shown their disregard for the dedication of public workers.

Today, public sector employees stand in the middle of a battle over a pension promise around which they based their future plans, but one that can't be kept. I understand their anger. They were betrayed, and now their security is threatened.

Many argue that their employee contributions to these systems (negotiated amounts ranging from zero to 9.4 percent of salary) constitute paying their "fair share," and that it's the "state's" fault for not contributing sufficient funds to make the system whole.

Here's the rub: "The state" consists of all Illinoisans. During the past several decades, taxpayers have paid into the pension systems more than double the amount of public employee contributions. Taxpayers have contributed $8 billion more than originally called for by the 1995 funding ramp.

Under the current system, taxpayers will be expected to make up the difference between pension promises to workers and actual funds available. Largely due to inherent flaws within defined benefit plans, the state's pension unfunded liability now exceeds $100 billion.

What happens when citizens are unable or unwilling to pay the taxes necessary to keep the pension systems afloat? What happens when businesses flee the state because they can't afford to operate in Illinois? What happens when job loss leads to migration to other states?

While unions may be victorious in a lawsuit that seeks to overturn any reform as "unconstitutional," there will be little -- or nothing -- to be won long-term. Without real pension reform, the well runs dry, and state employees could receive nothing in retirement.

Speaker Madigan said we need "radical surgery." He's right. We need bold changes to ensure state government's ability to provide fundamental services and fulfill pension promises to the best of our ability.

With state Rep. Jeanne Ives, I've introduced House Bill 3303 that provides a clear path to modernize our pension systems by moving to a defined contribution plan. Private and public entities have embraced these plans because they are sustainable and better guarantee retirement security for all.

Under this plan, the state will continue to make payments into the pension funds for the next 30 years in order to pay for the pension credits that have already been earned. The retirement age will be raised, and COLAs will be frozen until the funds reach full funding. The sustainability of the system -- as well as ability to treat younger workers fairly -- depends upon it.

Going forward, state workers who participate in Social Security will receive a 3 percent employer contribution to a self-managed fund to which they also contribute. Teachers, the bulk of whom do not participate in Social Security, will receive a 7 percent contribution from their school district toward a self-managed fund while their employee contribution rate will decrease from 9.4 percent to 8 percent.

To protect against swings in the stock market, workers have the choice to shift into safer investments like bonds or annuities.

These self-managed retirement plans are both flexible and portable, something not available under the current system.

We need to rethink old notions of retirement. The economy is dynamic, individuals are living longer, and the government -- which is supposed to serve taxpayers, not the other way around -- must change its retirement system to reflect these new realities.

State employees may have a promise, but they have no security. For those seeking to win a lawsuit, the game continues. For those seeking retirement security, House Bill 3303 is the answer.

• State Rep. Tom Morrison is a Republican from Palatine.

Share

Interested in reusing this article?

Custom reprints are a powerful and strategic way to share your article with customers, employees and prospects.

The YGS Group provides digital and printed reprint services for Daily Herald. Complete the form to the right and a reprint consultant will contact you to discuss how you can reuse this article.

Need more information about reprints? Visit our Reprints Section for more details.

Contact information ( * required )

Name * Company Telephone * E-mail *

Message (optional)

Success - Reprint request sent Click to close
Comments ()
Guidelines: Keep it civil and on topic; no profanity, vulgarity, slurs or personal attacks. People who harass others or joke about tragedies will be blocked. If a comment violates these standards or our terms of service, click the X in the upper right corner of the comment box. To find our more, read our FAQ.
    help here