“‘People really misunderstand the nature of this whole problem. Quite frankly, I don't think you can use the word 'crisis' to describe it at the state level,’ Cullerton said in an interview on WGN-AM radio. ‘It's something we have to deal with, but it's not something that we're on the verge of bankruptcy on,’ Cullerton said…
“‘These pension (proposals) we've talked about will save annually anywhere from $750 million to $1.5 billion. So you're still going to have real huge cuts that we'll have to make if we don't raise that income tax higher than what they're scheduled to go down to,’ he said.
“‘But the pension reform then is about tax reduction — not about the solvency of the pension fund or about diverting money to spend more money for education,’ he added… ‘That's really what it's about. Now, I wouldn't call that a crisis. I think people should put that in perspective,’ he said. ‘Keep in mind, it's not going bankrupt. The money that we save by lowering those benefits is going to be used to lower the tax rates.’
“Cullerton contended top business organizations were pushing the pension changes for the benefit of lower taxes and that the public was generally supportive because many people have been moved to 401(k)-style defined-contribution plans from the defined-benefit type of plans that state retirees receive…” (Cullerton: Pension debt not a 'crisis,' but about lowering taxes).
Many members of the Illinois General Assembly still want to renege on their legal and moral responsibilities and; thus, they want to cut public employees’ and retirees’ benefits, such as the cost-of-living adjustment. These members are also financed by “business-backed groups seeking lower income taxes at the expense of retiree benefits.”
Many members of the Illinois General Assembly still want to challenge the legal and moral commitment guaranteed in Article XIII, Section 5 of the 1970 Illinois Constitution, because what really matters for many policymakers is the elimination of the state’s pension payments.
A few members of the Illinois General Assembly want to pass a bill containing an inefficient, inadequate and inequitable self-managed or defined-contribution savings (401 k) plan and convince public employees to falsely believe that they can possibly save enough retirement income without having a defined-benefit pension or any Social Security income.
Public employees will never be able to accumulate enough assets for a secure retirement with only a self-managed plan. Defined-contribution savings plans have always been considered supplemental to an employee’s defined-benefit plan (or Social Security). They were not meant to replace a defined-benefit plan because of their lack of guaranteed, lifetime income for the retiree and the presumption that a retiree could make sound professional, investment choices that would sustain his or her longevity, inflationary and health care risks.
[Since their inception,] the private sector’s self-managed plans “have not produced encouraging outcomes... Reliance on a 401(k)-type defined-contribution plan as the sole employer pension will leave public sector workers with insufficient resources to ensure a secure retirement… [Furthermore,] a shift from defined-benefit to defined-contribution plans is not a panacea for the sponsor. It will not eliminate the current unfunded liabilities associated with defined-benefit plans; it will not reduce costs, and it will not lead to higher returns” (Alicia H. Munnell, Director of the Center for Retirement Research at Boston College).
These savings schemes are profitable for pension consulting companies and employers, contract and pension lawyers and actuaries, and also “business-backed groups seeking lower income taxes at the expense of retiree benefits.”
“…Pretending public pensions are the primary cause of state budget problems allows greed heads and ideologues to distract attention from—and therefore prevent cuts to—their beloved corporate welfare. In some cases, it also allows them to embed language in pension 'reform' proposals that transfers worker retirement money into alternative investments—the kinds that incur expensive hedge fund fees and enrich Wall Street…
“Lost in the debate, of course, is the simple fact that promises to workers are sacred—workers base career decisions on them. In the public sector sphere in particular, many workers traded the possibility of higher private sector wages for the promise of stable retirement benefits in the future. For this reason, a plot that uses pension money to enrich the already rich should be called what it is: not just tragic or unacceptable, but downright immoral and inhumane”
(A Penchant for Pension Cutting: The so-called pension crisis diverts attention from the real money drain: corporate welfare by David Sirota).