Wednesday, October 5, 2011

A Letter to My Colleagues and Friends at the IRTA about Pension Reform

Why should retired and active teachers be concerned about so-called "pension reform?" Consider the effects that it will have on the defined-benefit plan if the benefit formulation (for Tier 1 and Tier 2 teachers) is reduced? And what might the current teachers in Tier 1 do if their pensionable salary is capped, as this is the case for members participating in the Tier 2 plan? What do you think would happen if the vesting period for Tier 1 members is increased, and their cost of living adjustment is changed to a simple interest computation or even possibly eliminated? And what might Tier 1 teachers do if their retirement age is also raised to 67 and their extra-curricular assignments are excluded from the calculation of their final average salary (which has recently been extended to a ten-year average instead of four)? What would Tier 1 members do if their contributions are increased steadily from 9.4 percent to 17.43 percent by 2027?

It is important to note that as some members migrate to a potential Tier 3 defined-contribution savings option, will their contributions to the TRS defined-benefit pension plan be reduced? Will remaining teachers in Tier 1 and 2 have to make up the difference? These are a few of the ideas discussed and examined in meetings thus far and will be debated in the future until there is agreement on these issues.

Now ask yourself this question: how will the above-mentioned possibilities threaten the existing defined-benefit plan for current teachers and retirees, and why would any teachers choose the Tier 3 defined-contribution option? One answer is that most beginning teachers do not believe there will be a guaranteed pension for them in the future; moreover, some of them have even become cynical because of the past legislative sessions.

Furthermore, will the initial, anticipated 10-15% exodus to the proposed Tier 3 option also increase the State’s cost and its contributions to the pension system? The answer is yes, and will the State pay for it? The answer is doubtful, and though teachers will most likely become eligible for social security (and will be determined at the federal level), who will match these contributions? Local school districts or the State of Illinois?

In addition to these complex considerations, will the State also have to pay down the current $44 billion unfunded liability of the TRS pension plan more quickly as a result of any movement to Tier 3? The answer is yes. How will all of these concerns ultimately affect current teachers and retirees, and what might be the catastrophic effects and legal challenges of a proposed constitutional amendment?

Now consider why it is important that we continue to meet with our legislators and tell them that "pension reform" (or reneging on a constitutional contract) will not reduce the unfunded liability and address the causes of the State’s budget problems. Why is it important that we meet with our legislators?

It’s imperative that we do because attacks on our pensions will never cease; thus, we need to discuss reasonable and fair alternatives for solving the state’s budget problems and the disastrous effects that so-called "pension reform" bills would have on Illinois retirees and teachers, their families, their communities, and the recruitment of the best and brightest university candidates for teaching in our public schools.

Most importantly, we need to discuss the fact that any proposed "pension reform" bill will violate a contractual obligation guaranteed by both our State and U.S. Constitutions. We need to tell our legislators we vote, our families and relatives vote, our friends and neighbors vote, and we will network with anyone who will help us protect our retirement security and our dignity.

-glen brown



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