Chicago Debt
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Nom de plume, assuredly.
But the debt problem is real...I don't understand why they don't reform their pension systems. They can't do anything with employees who are vested, but that doesn't mean they can't make changes for those who aren't vested and for any new hires.
May be just a drop in the bucket, but at least it's a drop.
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"...led Moody’s to push Chicago’s debt into junk-bond status. The city, in turn, punished Moody’s by no longer sending it business."
It's the Chicago way.
Interesting that the Chicago Teachers' Union is not mentioned in the article, other than in passing.
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@George-K maybe you know, but isnt there something in the Illinois constitution that says the pension plans cannot be changed?
I think that the state congress tried to change it and were not allowed?
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In the article:
Both Illinois and Chicago tried to reform their pensions beginning in 2014, but two years later, the state supreme court decreed any reductions in vested pensions unconstitutional. This ruling left Chicago with little room for maneuver and led Moody’s to push Chicago’s debt into junk-bond status.
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But that's reductions in vested pensions. New hires are not vested. In most systems, many employees with less than five or ten years are not vested.
That's where you start saving. Either you go to a hybrid system such as FERS or the state of Alabama, or you raise the number of years necessary to retire, or you lower the average compensation rate.
Example...For many Louisiana state jobs, you now must work until 60, you will receive 2%/yr compensation based on your best 5 years. If you wish your spouse to receive benefits when you die, you'll have to take a 5%-10% cut... That's important, because due to GPO, your spouse will not usually receive any SS widow or widower benefits. Not that it would amount to much because of the WEP.
