All local government bodies are members of the Illinois Municipal Retirement Fund. Unlike SERS, TRS, and SURS, IMRF has a goal of full funding. There are two parts of the funding of IMRF. The first comes from the employee and is 4% of the employee's salary. The second is assessed on the employer. That amount varies and is based on actuarial formula that would theoretically put the employer at 100% funding within 5 years. The actuaries come up with the amount each year and send a bill so to speak to each employer. Each employer has to pay. There are no options to forego a payment or reduce the amount.
As the value of IMRF's portfolio drops, the employers end up paying more. I believe Champaign County's amount has recently been around 9% of payroll. This past fiscal year, the County's share of IMRF costs was about $2.4 million.
According to IMRF, the share for Champaign County and every other local government is going to rise in the coming years. And the increase is so great that IMRF is actually considering allowing employers to phase in their rate increases.
It's not farfetched to think that virtually every extra cent of revenue coming to local governments in the next couple years will be used to pay increased pension obligations.
Oh there is no doubt at all, this is a disaster waiting to happen. Pension payouts will be cut, contributions will have to increase, and taxes are gonna go way up.
The rising taxes will be the fun part as this will be for a retirement benefit (pensions) that has all but disappeared for those in the private sector and who don't work for unions. I am sure those folks will be so happy to prop up the retirements of others while they watch their own evaporate.
And it doesn't help that these pension funds seem to be run by people who have no clue what they are doing. Many of these pension fund managers just ride their assets all the way down to 0, just look up some of the news on CalPERS and the many billions they are losing. Same thing is happening all over the country.
The vast majority of these pension funds will outright fail, and we'll have the PBGC of the federal government backstopping them and paying out benefits pennies on the dollar.
Count on it. Retirement as you have known it is finished.
actually the IMRF pension system is extremely well run. it's been close to 100% funding, while the state systems have been more like 50%.
Too bad the government can't go bankrupt like the Big Three automakers. Then we can just layoff a bunch of workers, fire some, and cut everyone's benefits, just like we all want to do to the Big Three when they go under.
Unless that is not the way to think about it, because corporate mismagement is inexcusable, but government mismanagement is allowed?
How much should a pension be? Federal pensions are approximately 60% of the average last 3 years' pay after 30 years' service, with an additional increase of 2% for each additional year (up to a limit of 80% I think). Most teacher pensions and State of Illinois pensions are higher I suspect.
The IMRF pension payout should be 4%. That's what the worker puts in, that's what the worker should take out. Otherwise the worker should have saved more, or gotten a better job.
Why should taxpayers have to pay for people's pensions just because they worked for the government? No one forced them to work for the government, that is their choice. Especially in these times. Nobody is chipping in on my pension, why should I be taxed to chip in on theirs?
As I understand it, teacher pensions actually max out lower. The pension amount is roughly an average of your last four years with a max at 75%, for which you must serve 35 years. If you go before that, it is basically 2.2% (or lower) times the number of years. I have no idea what state pensions are, but I think that SURS pensions are more generous and have better benefits than teachers do.
Anon 5:15: Really, private companies don't chip in on 401K's at all? No contribution whatsoever for most public employees. How about annual bonuses? After fifteen years in the public world, I have not received any bonus whatsoever, nor have my co-workers. Yes, many of my competent colleagues and I could go get a "better job," but then you would just complain about the poor service that you receive from public officials. There's really no end whatsoever to the circle of complaints from some individuals. In the case of the pension plan that I belong to (not IMRF), the primary reason for its financial troubles is that the State of illinois borrowed the money from the contributions and is eventually going to have to pay it back. As always, you can have anything you want, but you can't have everything you want.
Anonymous, you must not be working for any of our local governments. In Champaign, we call the bonuses "pay for performance" which is money over and above the cost of living.
A bonus? For doing your job? If you don't like the pay at your government job, quit, but don't hit me up to pay your pension. Want a raise, want a pension, want a 401k? Go work for Enron and take your chances, but a guaranteed government pension is for France, not the USA.
And you threaten poor service by workers without government pensions? Puh-leeze. Like the government and the workers do so great now.
but a guaranteed government pension is for France, not the USA.
Well, seeing as there are millions with guaranteed government pensions, it would seem that you are wrong. I see nothing wrong with reducing govenrment pensions. but it would be outrageous to change those terms after people have made had commitments made to them.
It's also ridiculous to look at any one element of a person's compensation without looking at others. perhaps some govt people make less but get the pension.
The IMRF pension deficit is a short term phenomena. Just like the rest of our deferred comps, 457's and 401k's, the pension funds have lost value. The difference is, when my 457 loses value I'm not obliged to increase my deposits to make up the difference, I just wait for it to recover and bet on "dollar cost averaging" to keep my return higher than inflation or bank interest by the time I retire. Over the longer term, the IMRF will recover its value just like the rest of our investment accounts. If the market never recovers, well then things are pretty bad and the pension fund question is likely the least of our worries. However, I think the State of Illinois pension has underfinding problems caused in large part by the politicians diverting funds to other uses instead of depositing it in the pension -- then exacerbated by the current economic conditions and that's a different problem.
For those of you arguing that people shouldn't have pensions, haven't you ever been advised that your retirement is a three legged stool -- savings, social security, and pension? I'd say rather than arguing that your neighbors shouldn't get pensions from their government or other jobs, you need to get out there and either agitate for a pension in your job or change jobs to a company that provides pensions. Don't fool yourself, pensions do come at the expense of wages and raises but some of us are willing to forgo the short term satisfaction of higher pay or better raises for the deferred benefit of a pension.
Wow, what a display of Christian compassion and carrying forward the words of Jesus to care for one another. When did greed and not caring about anyone else, especially those who are willing to work in the public sector, become acceptable conservative values? It is really sad. We all pay when the people end up in poverty whether they are children or the elderly.
Meanwhile, to inject a little bit of factual information. IMRF employees currently pay 4.5% of their salaries toward the program. The pension is 55% after 30 years, 65% after 35 years, and 74% after 40 years. Personally, I am deeply grateful that some folks are willing to work in the public sector and put up with the abuse and disrespect that some people feel entitled to heap on them. My mom taught school for many years and her pension is not large and she earned every dime of it.
The comments here are really making me feel really good about taking a 50% pay cut to go into public service. It is nice when you make a big personal sacrifice for the common good and get such warm appreciation.
SERS (the state employees pension fund) has much lower benefits than the IMRF or TRF (the teachers fund). About half a percent per year less if I remember right.
The City of Champaign IMRF is over funded... Guess who gets an IMRF pension..... Police and Fire are underfunded. Police is down to around 63 percent and fire may be slightly higher..... of course Police and Fire pay higher in 11% for police, hence the higher rate of return for the officers... but consider this before everyone starts to complain.... in the past 8 years, 4 officers have died before they reached age 55 of heart attacks and the majority of them had been off the job for less than 3 yrs.
Isnt your Pension Mr. Sheldon covered by IMRF? Your complaint would be?????????????????????????????????????????? what.
Too many Anonymous comments from local government workers to sort out any positions or information regarding Mark's post.
Too many Anonymous comments from local government workers to sort out any positions or information regarding Mark's post.
Sorry you're not smart enough to sort through the info. Guess you're not qualified for a gov't job :) What do you do for a living?
yes I'm in IMRF. And I wasn't complaining. Just pointing out a cost of government that is due to go up dramatically in the coming years.
Too many comments from government workers? Probably because government workers know more about their pension system than the general public -- who is generally uninformed about how many things in government work. The newspapers don't report in detail on the workings of government (no, opinion columnists don't count) and the subject is "too boring" for the public to read about. People know more about whether Britney's wearing underwear or how angelina and brad are getting along than they do about how their government works.
The full funding requirement of IMRF is certainly unique and follows the old Federal government civil service retirement system (CSRS). My mother-in-law is under IMRF system. She tells me there is also a membership fee which is somewhat unique for retirement systems. Are there any plans Mark to revise IMRF to give some relief to our government agencies? If not this will be a hugh financial impact which does not appear to be budgeted for by any of our local governmental agencies whose employees are members.
I think local govt. workers deserve a pension, and I'm fine with having my taxes pay for their pension. It's no different than purchasing products from a company that contributes to 401K plans. Actually, I would rather my spending dollars go to companies that offer their workers decent wages and benefits, that way I don't have to subsidize them through taxes when they need medicaid or food stamps.
But what really steams me is how these pensions are invested. Have you seen the list of IMRF's holdings? Haliburton, Exxon, Philip Morris, the list goes on and on. It is full of war profiteers and corporations that profit on the destruction of our health and our environment. Why are my taxes going to buy shares of these companies?
Haliburton, Exxon, Philip Morris, the list goes on and on. It is full of war profiteers and corporations that profit on the destruction of our health and our environment. Why are my taxes going to buy shares of these companies?
Because those companies make money, and the money fund manager's job is to make money, not social commentary.
We’ve read this post and the comments it elicited, and we understand taxpayers’ concerns about pension costs in this uncertain economic time. Recent market events have been unprecedented, and IMRF, like every investor, has seen its assets decrease in value. We understand the financial pressure our employers and taxpayers are under. For that reason—although we are committed to a 100% funding goal because provides the lowest long-term cost to taxpayers—we are working to moderate any employer rate increases in the short term.
We want to clarify a few points Mark made in his post, as well as some issues raised in the comments section:
IMRF has provided pensions for retired public sector employees for nearly 70 years, in both good and bad economies. We believe every worker—not just public sector workers—should have a secure retirement benefit. A secure pension for municipal workers not only helps them remain financially independent when they retire, but minimizes the likelihood that they will become financially dependent on government programs or on family members, and allows retired workers to plow their pension dollars back into the Illinois economy.
To learn more about traditional pensions like IMRF, you can read a white paper authored by IMRF Executive Director Louis W. Kosiba at http://www.imrf.org/info/briefing_papers/10_2008_The_case_for_DB.pdf.
Ms. Horrell,
Thank you for reading and commenting.
Who says government is non-responsive. Try to get feedback like that at your next shareholders meeting
Thanks for commenting and correcting my five year figure.
On November 25th, 2008 at 01:39 PM, Anonymous (not verified) said:
Haliburton, Exxon, Philip Morris, the list goes on and on. It is full of war profiteers and corporations that profit on the destruction of our health and our environment. Why are my taxes going to buy shares
You want returns or You want to feel good??? Ya can't do both. You don't mind taxing the products these compainies make, Smokes, Gas, "Sin Taxes" That's where the moneye is.
I work for a local municipality, but I am not IMRF. 9.5% of every check goes into my pension, and the city is supposed to put a like amount in. For years the city reduced their contribution as a cost cutting measure, promising to "catch-up" when they could. Once they finally started to pay in extra they complained about the "increased" pension costs they were incurring. I don't pay into social security, but from various jobs I had before this one, plus occasional part time work I have done through the years, I have accumulated a modest SSI benefit, however I have been warned that I won't likely get that SSI because it would be considered a windfall in light of my pension.
Wake up...the employee pays 4% and the employer pays 4% and will rise. IMRF has been the only solid pension system in Illinois.