Amazing, I know.
After that somewhat scary open to Public Pensions Watch yesterday, I thought I’d throw in some good news.
Some politicians in Illinois voting to drop pensions for themselves.
No, this is not a joke.
It’s the end of the line for pension benefits for Naperville City Council members.
Members of the council last week deleted pensions from the list of benefits they receive and amended the city code to reflect the change. As of March 4, council members no longer are eligible to participate in the Illinois Municipal Retirement Fund.
The final vote was a formality, the only logical step after a majority of council members declared that fulfilling the duties of their office does not require them to work at least 1,000 hours a year — the minimum to be pension-eligible.
Pensions for council members have been a hot-button issue in the city, with one member long pushing for an end to the practice, others saying he was doing so only as a campaign tactic while running for statewide office, and at least one member saying he just wanted the issue to go away so the city can focus on more pressing concerns.
Ultimately, the unanimous vote to end pension participation, made in the absence of members Judith Brodhead and Robert Fieseler, means members who have not completed the eight years necessary to become vested can file paperwork to recover the paycheck deductions they have contributed to the Illinois Municipal Retirement Fund, or IMRF. When those council members step down or lose an election, they will not collect monthly retirement checks.
Future council members cannot contribute to or receive benefits from IMRF because a resolution passed Tuesday says their position no longer requires enough work each year to be eligible.
Well, hot damn. While it’s not getting rid of the pensions of the more “professional” politicians (for example, the mayor will still be on the pension), still, it’s a start.
The savings aren’t huge:
The end of pensions for council members stands to save the city about $11,000 a year, City Manager Doug Krieger said — money it otherwise would have spent making employer contributions to IMRF on council members’ behalf.
Though, if you think about it, given the underfunding of pensions, the ultimate costs of such pensions may be ultimately higher. But the city will no longer have to worry about that particular liability.
Separately, IMRF is one of the best state-wide pensions in Illinois, but it’s sad they need to put up a page to defend a 100% funding goal . And it’s not even at 100% yet. The most recent number I can find is 86% fundedness (which of course encompasses a bunch of valuation assumptions, but more on that another time).
I might dig into the IMRF numbers more deeply another time (because there’s some hinky stuff in its history), but having only 86% on current liabilities covered is not fabulous from a real world point of view. If anything, pensions and other liabilities need to be more than 100% funded, because there needs to be a little excess risk capital.
All the public pension (and other) shortfalls right now have an implicit taxpayer put, and the taxpayers aren’t putting up with this stuff so much any more. Or the taxpayers aren’t there to be put upon.
So that option may be worth less than people think.
But let me not rain on this parade. Huzzah for the city council members of Naperville, Illinois!
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