Chicago and Illinois tier 2 teachers are screwed.
Teacher Appreciation Week?
It’s Teacher Appreciation Week.
When the Illinois legislature created a Tier 2 pension system for teachers hired after 2010 they showed how little they appreciated teachers.
Under the leadership of the Illinois Speaker of the House at the time, Michael Madigan (who has since resigned and has been indicted for corruption), Illinois legislators created the Tier 2 to save the state pension costs.
Never mind that for decades the legislature failed to make adequate and actuarial payments to the pension system.
Under the 2010 law teachers hired after January 2011 would pay a heavy price of the legislature’s failures.
I was a delegate to the Illinois Education Association’s state convention held just prior to the law change. Up until that meeting the state’s largest union had a policy that any change to our pension system was non-negotiable. IEA lobbyists were directed to not discuss it. But facing political pressure from Democrats, the state leadership asked the delegates to give their lobbyists permission to negotiate pensions.
I took to the mic and spoke against the proposal, warning that Madigan and the legislature would see this as a opening the door for pension cuts.
The leadership won the vote.
I was proved right as a week later the bill was approved by the legislature 12 hours after the bill was introduced.
The rules applied to Chicago as well as all Illinois teachers. It raised the age at which new employees could retire to 67, added a new cap on the maximum benefit an employee could earn and reduced cost-of-living adjustments for retirees.
The new Tier 2 also imposed a longer vesting period for new workers: Employees hired on or after Jan. 1, 2011 would need to serve for at least 10 years before qualifying for any retirement benefits at all.
It is estimated that 30% of new teachers will leave in the first year.
Fewer than 30% make it 10 years.
Most Illinois teachers in Tier 2 won’t qualify for any pension from the pension system.
After paying in 9% into the Chicago Teachers Pension Fund or the Illinois Teacher Retirement System, Tier 2 teachers will get less than zero back.
For Tier 2 members, the total normal cost of benefits is 8.99% of salary. But each member contributes 9%. In other words, Tier 2 members are putting in more toward their benefits than they’ll get back. They’re getting negative 0.1% in retirement benefits.
Illinois teachers are part of the 40% of teachers across the country who also don’t get Social Security.
In other words a teacher in Illinois could teach for nine years and have no retirement benefit for the work they did.
That’s not exactly appreciation.
Today, four people were found guilty of bribing politicians in Illinois. For the millions and millions of tax dollars that the politicians threw their way, the bribers might get "up to" four years in jail - maybe. Mike Madigan and the slime he associated with in the legislature are due to be tried next April - maybe.
Had that tax money alone been used for the state's legal obligations for our pension systems, there would be no Tier 2 or other created problems and deficits in TRS.