Pension Reform Remains a Hot Issue

Pension reform still very much on the front burner

“You knew what you were getting yourself into when you took the job." It’s a mantra that virtually every fire and police official has heard, as discourse about public pensions continues to be heated and controversial.

Ironically, it’s difficult if not impossible to find a person in uniform that will disagree with that statement in general. Young people who become firefighters/paramedics do in fact know that they’re signing on for jobs entailing long hours, working holidays, dangerous situations and often brutal conditions. Something else however that they also know when they take the job, is that they’ll receive a reasonable pension at their retirement.

As is true across the country, Illinois is finding that public pension funds are underfunded and facing depletion. Nothing legislatively will happen with pension reform until the fall veto session of the general assembly. In the meantime however, it continues to be a topic of hot debate. According to all parties involved, this is largely due to misconceptions about police and fire pensions on the part of the public. Without question, public pensions and pension reform is a “complex and emotional topic,” said Illinois State Senator and former Downers Grove Mayor Ron Sandack.

“There’s a ton of misinformation and a ton of anecdotal information that drives the emotions even further," he said.

Firefighter/paramedic Rob Pekelder is the president of the Downers Grove Professional Firefighters Association. Public pensions have probably been more on the radar of the general public over the past three or five years, Pekelder said, largely due to the slump in the economy.

“When the economy was good, no one complained about our pensions.”  This is for good reason, he added “Our pensions are not extravagant, especially for the type of work that we do."

One of the most prevalent false impressions about fire and police pensions that clouds peoples’ perspectives on the issue, is the idea that all public pensions are one and the same. This is not true. Downers Grove Police Sgt. Paul Lichamer is the president of the police pension board, and former president of the Union FOP Lodge 73.

"Everyone typically looks at government pensions and clumps us all together into one group. We’re not the same as the state workers such as the teachers. The distinction is important because we all do different jobs,” he said. “We can’t work until the same ages as other public employees can. The physical demands and stresses of the job take their toll as we get older.”

Something about which most of the public seems unaware Pekelder said is the fact that police and fire contribute more than 9 percent of their salary to their pensions. Furthermore, they don’t get social security upon retirement, making them reliant solely upon their pensions.

Sandack said that his primary concern about public pensions is not that they’re exorbitant or unfair. It’s that they’re unsustainable as structured.

“What hurts me is the bashing of public employees, municipal or state, including the teachers. That they’re somehow greedy. They don’t get into the business to make a million bucks. The vast majority are selfless public servants who deserve lifetime security as bargained for when they got their jobs. I’m in favor of reform, only because it has to happen or what was promised to them won’t be there,” Sandack said. “If we don’t act soon, the municipal funds are in danger of not being there and failing. At the end of the day, these funds as presently designed and maintained won’t be enough. They’re unsustainable. It’s cliché but true. The math is irrefutable. We have to change the benefit structure.”

Earlier this year, preliminary changes were made for new fire and police hires.

“The retirement age was changed from 50-55, and the benefits calculation was changed,” said Pekelder. The union was very uncomfortable with this, as they feel it’s wrong to separate new and existing employees into two distinct tiers. Furthermore, he said, changing the retirement age is dangerous because of how strenuous the work is. “After age 50, you really increase the likelihood of getting injured on the job,” he said.

Lichamer concurred.

“Physically, we can’t work until we’re 65. People don’t want a 65-year-old policeman trying to run after an 18-year-old. We would have more duty disability and workman’s comp claims than retired police officers at that age.”

From the union’s perspective, Pekelder said, the one positive outcome from the revision, is that there’s a requirement for employers to consistently fund the pension properly. He and Lichamer both stressed that Downers Grove has always funded appropriately. “We have never had that issue. Our village has always done the right thing. But it’s significant because it’s happened so often around the state,” Pekelder said.

He added that the unions will be universally against any changes made to pensions of current employees.

“The long and short of it is that we’re against any reduction and impairment of our benefits. Period. For current employees we are steadfastly against it,” said Pekelder, adding that such changes would be unconstitutional. “When someone is hired, the pension benefits are part of a contractual relationship, and the benefits cannot be reduced. I’ve been planning for retirement using one set of rules. It’s not constitutional to change those rules.”.

“Our benefits shouldn’t be reduced. It’s morally wrong, it’s constitutionally wrong, in which case it will be decided by the courts,” said Pekelder.

In working toward pension reform, Sandack said that union representatives will meet with legislators and decision makers to come to a reasonable compromise.

“I’d like a phased in way of making changes to benefits. I like the idea of giving options that can get these funds healthy and keep the system sustainable so that people who enter the public realm have pensions they can depend upon. I hope that the heated discussions calm down and we don’ have the toxic realm upon which conversations take place,” he said.

Without question, Sandack said he believes two things must happen.

“There are a myriad of ideas, but payment of high contributions by the beneficiaries will have to occur. And the state must unequivocally make their payments. Reality is such that we will not return to the normal we once knew. There’s a new normal. We’ll need to work longer than we wanted to, pay more into the system and then we’ll have a sustainable plan upon which recipients get what they deserve. We have to be more austere. We have to get real,” Sandack said.  

Joseph O'Shaughnessy August 02, 2011 at 12:07 PM
Get real, folks. There should be no discussion about rearranging the benefits of police and firemen during a contract. No deal. No dice. Save your money, if you want, by pulling the retirement completely from state Senators and Representatives. Pull the retirements from those who not only waste our money on foolish projects, like fountains and fancy landscaping instead of public parks or swimming pools for kids. We could do the competitive business thing. We could have only as many of the "Firemen and Policemen Service" as we can afford. Let's have well-paid, capable on Mondays, Wednesdays and Fridays. Or some over-age-in-grade Rent-A-Security Guard. Hey...even cheaper. You can be the one to worry on Tuesdays, Thursdays, Saturdays and Sundays whether your house and family will be consumed by flames or whether someone will steal your car or rob you late at night after the movie. It's the herd mentality, the current mantra of the no-sacrifice society. (Just talk sacrifice for someone else.) Now, don't misunderstand. We should re-negotiate terms with the representatives of the security forces that protect us. We do it all the time. But we should do it in good faith, when a new contract period arises. That's fair.That's what unions and public representatives are for. Not in the media. In the long run, you will see that what feeds this slash and burn herd mentality is a definite anti-union agenda and not necessity or the inclination of most of our citizens.
Jeffrey Crane August 02, 2011 at 12:28 PM
I have an idea Senator. Why don't we start with your pension. Lead by example instead of using taxpayer dollars to stuff in your pockets. Do not pretend to be supporting these hard working individuals when you are dipping into their pockets to support yourself and your future. Isn't that the real reason why you took the appointment anyway? Read on....... http://www.dggab.com/showthread.php?39-Sandack-for-pension-reform.
William Vollrath August 02, 2011 at 01:48 PM
When public (both officials and employees) salaries/pensions/benefits are out of line with what is now viewed as reasonable in the private sector, there needs to be adjustments made to the system.
Ron Sandack August 02, 2011 at 03:02 PM
Wendy's article is an ambitious endeavor because public pensions are truly complicated. When Wendy called me I suggested that it may be helpful to break up her piece and to separate municipal pensions (police and fire) from the 5 State pension plans. That's because municipal and State plans are very different and lumping them together may only add to the confusion. As to the State plans only, they are presently about 38% to 41% funded and combined with retiree health insurance and other State borrowing account for approximately $140 billion in State debt. IL has the largest unfunded pension liabilities in the nation. The State Treasurer reports that this indebtedness amounts to about $30,000 in liability per IL household. And these numbers are only getting worse and are crowding out budget room for social services, transportation and other needed State services. If nothing is done, the State's public pension plans will implode. Reasonable reform must occur or the exodus from IL will only accelerate with no genuine opportunities for our children and grandchildren. As an FYI, in Nov. of 2010 when I joined the Senate I immediately declined the legislative pension. I was the first member of the General Assembly to do so but was joined by Rep. Tom Morrison in Jan. of 2011. I believe part-time legislators should not receive full-time benefits. So I became the Senate sponsor of a bill to end all legislative pensions. I will again try to get that bill passed again next session.
Chris Miller August 02, 2011 at 03:38 PM
The reality is that the private sector and the public sector have, historically, been separate. It's not fair or *reasonable* to now lump them together now that the private sector is hurting. I think there's a bigger issue going on here, and it's jealousy. My husband and I are both teachers. We've heard people in the private sector for years sympathize with teachers, how hard they work, how dedicated they are, how little they are financially compensated, etc. In the meantime, we've seen them build their huge homes, drive their fancy cars, and enjoy their vacations. Not that there's anything wrong with those *things.* If you can afford them, good for you! I don't recall anyone complaining about our pensions back then. We continue to sacrifice so that we can responsibly raise our family in our wonderful community and maintain our careers working with and for children. Since the economy tanked, we can't help but notice all of the complaining private sector folks now do about teachers, their salaries, their *safe* jobs, unions, etc. Teachers contribute a significant % of their already low salaries to their pensions. Teachers don't get social security. Their employers don't match their 403B contributions. We all knew this when we joined the profession. We've planned accordingly, and now the private sector wants to change the rules. I appreciate that the math doesn't lie, but who was doing the math back when pensions were developed? Jealousy is an evil thing.
Suzanne Matthies August 02, 2011 at 03:39 PM
Most of us get to choose how much to contribute each month and who will manage our retirement funds? Some even get matching funds from their employer. Why do our public servants not get the same choices? From what I have read, the government has not been a good manager of retirement funds. If the unions reject the idea of it's members choosing who will manage their retirement fund, it would seem to me that they are not looking out for their members best interest. Fulfilling current contracts and moving to a new system would create two tiers until the old system was completed, but why is that such a terrible thing? Would it create some kind of work problem, morale problem, team stress....what would be the fallout? The alternative of continuing an unsustainable system....what would that create? When our public employees are in trouble, we are all in trouble. My hope is that we can find a long term solution before we all come unglued
Chris Miller August 02, 2011 at 03:53 PM
Suzanne-The school districts we've worked for have allowed us to choose from a list of companies for our 403B investments. We also get to choose how much we contribute each month. School districts do not match contributions. Between our TRS and private 403B contributions, my husband and I contribute approximately 20% of our income to our retirement.
William Vollrath August 02, 2011 at 04:13 PM
Most teacher salaries are no longer "low,'' especially compared to the non-salary of unemployment which is the reality for over 20% of our adult population. Also, might I suggest that when very attractive compensation/benefit packages largely remove much of the "service" element from the public sector jobs, we may begin to find less dedicated individuals in many public sector positions...
Suzanne Matthies August 02, 2011 at 04:18 PM
Chris-Please help me to understand how the government of State Of Illinois impacts your pension. I have been assuming that Illinois took your contributions and spent them on something else. I really would like to know what went so wrong.
Melanie C August 02, 2011 at 04:36 PM
Maybe I am a simple person but why can't the individual create an account titled "retirement" and contribute to it every paycheck? Why must the taxpayers help foot the bill? I am still learning about all the intricacies of this topic but I just can't understand how the government (us) should be responsible for funding anyones retirement. When my husband and I retire we will have no safety net except the one we provide for ourselves. I agree that the pensions which currently exist should be honored but in order to do that, reform will need to be implemented. I suppose increasing the amount that the individual puts in would be a start. If the pension recipients want their "just dues" then sacrifices MUST be made by ALL!! As for the teachers, I agree that jealousy is an evil thing. Unfortunately, I myself, am more jealous that teachers get summers off. I think most people believe that they "work hard", are "dedicated" and are not "financially compensated" enough. I am grateful to all teachers who truly want to make a difference in the lives of our young people. I have always said that teachers, police, fire fighters and the like should be handsomely compensated. It is appalling that our sports figures are rewarded the way they are just for being mediocre at best at their "job'.
Scott C. August 02, 2011 at 04:57 PM
Ron has been consistently wise in urging folks to separate the issues/different categories. This isn't a one size fits all pension problem and it won't have a one size fits all solution. This much is true...as with many things, a few bad apples can spoil the bunch. And there are bad apples in ALL categories, mostly in the form of administrators who receive exorbitant salary increases in their final years to pad their pensions. Step 1: Fix the problems with the bad apples. All of them: police, fire, municipal and education administrators who gamed the system. Here is a link to read about them if you like: http://articles.chicagotribune.com/2010-07-16/news/ct-met-pension-deals-20100716_1_police-pension-illinois-pension-final-salaries Step 2: Support Ron's admirable leading by example and refusing his legislative pension. Part-time legislators have no business whatsoever getting a pension at all. Period. Step 3: Protect the rank and file police and fire personnel who are well into their careers and respect for the physical demands of their jobs. Any police/fire personnel more than 1/3 of the way through their career should be grandfathered in and exempted from major pension reforms. New/recent hires should be open to new models. Step 4: Find new models. Simple fact is protecting the old models is pointless if the money to fund them is gone. Some ideas: mandate minimum employee/employer contributions, no double dipping, tax payouts (as other states do).
Chris Miller August 02, 2011 at 05:50 PM
Our state representatives are discussing various options including increasing teachers' required contributions into their TRS (Teacher Retirement) accounts, increasing their required years of service, and/or minimizing retirement benefits. Perhaps someone out there can give more specific information. The idea that teachers get three months off every summer is a fallacy in a majority of cases. Most of the public does not see/appreciate all of the June, July, and August time that goes into following up the end of a school year, professional development, graduate coursework, grant-writing, teacher institute days, getting ready for the new school year, etc. I would be happy to converse with anyone wanting a detailed description of all of the *extra* hours my husband puts in during the school year and the summer: many evenings, weekends, and holidays. On top of teaching a graduate course, he has gone in to school multiple times a week throughout the summer for various tasks and projects. He officially goes back to work on Monday with students, but he has been working for them all summer long. I only share this to inform, not to complain. He teaches in a wonderful school district that appreciates his efforts for the students. We are blessed to be a part of this community.
goddess August 02, 2011 at 06:36 PM
As long as the legislature can "borrow" money from the pension fund they will. Let's just remove that temptation entirely. The current agreements must be honored. It's only right. But, new hires should pay into Social Security and have a 401K like everyone else. Pensions are yesterdays system. Designed for a different time, when people didn't live to 85. To work 30 years and retire at 50 and then expect another 30+ years of pension payments is a system designed to fail. That's not a swipe at anybody or the job they did, it's just the truth. If that worked everyone would be able to retire at 50.
Jeffrey Crane August 02, 2011 at 07:39 PM
Senator: With all due respect, I have searched high and low for the statement made by you that you will forgo your legislative pension and cannot find it anywhere. Can you please provide a link to this information? I would appreciate the clarification.
Melanie C August 02, 2011 at 07:45 PM
Chris, your husband sounds like a wonderful teacher. I applaud him for his genuine dedication. I pray that my daughter is blessed with many teachers who take the time and effort to really care about her and her education. unfortunately, I believe, sometimes people flock to these pension positions out of a "what can I get out of it mentallity". Sadly, we can't separate the good from the bad. Thanks to you and your husband for devoting your lives to education.
Chad D. Walz August 02, 2011 at 10:01 PM
If I were a public union employee I would start my own IRA...ASAP. I don't care what laws are on the books that say the state has to pay you your pension. If the government can't pay thier bills you may not get your pension. I would opt out of it now and start saving on my own if that is an option.
Melanie C August 03, 2011 at 03:14 PM
John D.----Do you have anything of VALUE to add to this conversation? There are many comments throughout patch that disagree and get a tad snarky but I don't hear you saying they don't know much. If someone has a problem with what Jeffrey is saying then by all means debate him. I am sure he would be happy to back up his statements and "opinions". How do you know who gives Jeffrey the time of day??? What slanderous things has he said? Maybe you could give us some specifics? Maybe everyone speaking their mind even without much weight behind it on the patch should be threatened with a law suit. The question for me is why are you singling Jeffrey out???? HMMMMM...... As far as I can see, he is just another concerned resident of this town and country!!!! I am certain that Jeffrey is not looking for attention but rather just trying to stay informed and engage in the happenings of the world he lives in-------like the rest of the patch readers. Again, please tell us all the "slanderous" things Jeffrey has put out there. Correct him and help him be a better more informed person, perhaps like yourself.
Liz Chaplin August 03, 2011 at 03:17 PM
John D. I flagged your comment as inappropriate and I hope it gets taken down.
goddess August 04, 2011 at 01:32 PM
They did take it down. Damn. Because now I really want to know what he said. :)


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