Treasurer unsure of effect of pension changes

2013-12-05T15:11:00Z 2013-12-05T18:25:15Z Treasurer unsure of effect of pension changesKurt Erickson Times Bureau The Quad-City Times
December 05, 2013 3:11 pm  • 

SPRINGFIELD — State Treasurer Dan Rutherford said Thursday he has not done the math when it comes to figuring out how the state's newly enacted pension changes will affect his own retirement check.

On the same day Gov. Pat Quinn quietly signed the landmark pension changes into law, the 58-year-old treasurer hosted a conference call with reporters to say again he opposes the legislation.

Rutherford, who is running for governor, said he thinks the changes won't survive a legal challenge because the state Constitution bars lawmakers from diminishing pension benefits.

"I am not a litigious kind of guy, but this one is inevitable," he said. "I hope that we have an expeditious resolution to it."

The Republican from Chenoa said he has not taken the time to calculate the effects of the landmark legislation on his own pocketbook.

"I've been busy looking at the constitutionality of it," Rutherford said.

But, according to a database created by the Center for Tax and Budget Accountability, Rutherford could see a significant loss in buying power if the pension proposal goes into effect next year.

If he were to retire next year, Rutherford would receive a pension worth about $115,000, based on his current $135,600 salary. While that amount will grow on a yearly basis, the database shows the pension changes would decrease the amount of growth by $44,800 in the first five years.

After 15 years, the database shows Rutherford would see $392,000 less than he would under the current pension set-up. Two decades from now, the projected loss would be $719,000.

The online database, which is on the Internet at www.weareoneillinois.org/documents/COLA-cut-spreadsheet.xlsx, is designed to show current state employees and retirees how a reduction in the state's current 3 percent cost-of-living adjustment would affect worker pensions over a period of years.

Under the plan, the cost-of-living adjustments would be based on only the first $30,000 of pension income.

The measure, which was narrowly approved by the General Assembly on Tuesday, also will raise the retirement age for workers under the age of 46, on a sliding scale. It also would give workers an option of joining a 401(k)-style retirement savings plan.

The savings from the various changes will be used to help erase a $100 billion shortfall in the pension systems.

Rutherford is not alone in the GOP gubernatorial field when it comes to opposing the plan. State Sen. Kirk Dillard of Hinsdale voted "no." Wealthy businessman Bruce Rauner of Winnetka also urged lawmakers to vote against the plan.

State Sen. Bill Brady of Bloomington voted in favor of the new law.

The legislation is Senate Bill 1.

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(1) Comments

  1. Tom1948
    Report Abuse
    Tom1948 - December 06, 2013 7:49 am
    Most would agree that Illinois had to do something about the pension problem, but publishing the Treasurer's pension payout may give the public a misguided view of what rank and file state workers receive.

    There are five state pension systems making up the pension shortfall. The judicial system was not included in the new law. Mr. Rutherford is a former legislator under the state officers and legislators pension system. This system, as well as the Illinois Teachers Retirement System (TRS) do not have a social security component. Following is a general comparison of the two.

    TRS results in a maximum pension of 75% of the average of the best 4 years of salary with the stipulation that the annual salary can not increase more than 4% per year for the 4 years.

    Contrast that with the system Mr. Rutherford is in. They reach a maximum of 80% of their salary after 20 years. But it is not averaged over 4 years. It is based on the highest salary they have received (even one day will qualify). Actually, it is not even the salary they received; it is the maximum salary authorized, not necessarily what they actually received.

    For a comparison with non-Illinois state pensions, consider the old federal Civil Service System (CSRS) which also did not have a social security component. CSRS retirees had to work over 42 years to receive a 80% pension which is reduced by 10% to provide a 40% spousal survival pension. Both state programs I believe provide a 50% spousal survival annuity without a reduction.

    For a better perspective than Mr. Rutherford, the average state pension is a little over $39,000.

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