In other retirement news, Illinois' General Assembly adjourns without a Tier II fix.

In 2010, the Illinois General Assembly did what they often do. They acted rashly and without concern for the consequences.

In order to pretend that they were doing something about the huge public pension debt, they created a Tier II, which cut benefits and extended the number of years of work needed to receive the benefits.

This is what happens when politicians treat a funding problem as a benefits problem.

Rather than adequately fund the system, cut the benefit.

For decades the Illinois General Assembly has failed to meet their responsibility to fully fund the state’s public pensions.

So in 2010 they created a Tier II.

Teachers and other public employees hired after January 1, 2011 saw their pensions reduced, their yearly increases cut and their required years of service extended.

Teachers in the Teacher Retirement System do not pay into Social Security nor do they receive Social Security benefits unless they have 40 quarters paid in.

But federal law requires governments to provide benefits that are at least equal to Social Security. If a pension fails to meet that “Safe Harbor” requirement, the employer must make up the difference.

Tier II will fail the “Safe Harbor” requirement.

Already strapped local school districts will have to make up the difference if the Illinois legislature fails to act.

A union-backed proposal would aim to fix the “Safe Harbor” flaw of Tier II, in part by increasing the maximum salary used to calculate pension benefits. The current maximum salary for Tier II employees is more than $40,000 less than the Social Security salary base and has increased at half the rate of inflation. The new average salary calculation for Tier II would be the same as Tier I.

The proposal would also include an annual non-compounded 3% cost of living adjustment for all pension systems to keep pace with inflation.

Action is urgently needed as many Tier II employees are facing retirement.

So, naturally, the Illinois General Assembly just adjourned for this session without taking any action.