The four pensions (Police, Fire, Municipal Employees and Laborers) were poorly structured . There were no safeguards to protect them from powerful pension raiders, unfulfilled promises of deferred payments and other bad practices. At present, the City of Chicago Employer contribution is underfunded by $14.75 Billion
We currently have a defined benefits plan which is wholly unsustainable. Our Accrual multiplier per year of service is currently 2.1. Ideally, we should have an Accrual multiplier per year of service equal to 1.0. This disparity makes our current pension situation tenuous. We must ultimately transition to a defined contribution plan which will allow the future benefits to fluctuate according to investment successes.
We must adopt a common sense approach that is fair to current and future pensioners as well as taxpayers.
I support the state initiative to raise the retirement age, which previously allowed public employees to retire as young as 50 in some government pension systems and 55 in others.
We should weigh and assess the benefits of offering certain government employees the option of a one time lump sum payment.
We can replace the automatic 3 percent annual increases for government retirees with a capped, inflation-based cost-of-living factor and tax the pensions of non-residents who retire from work in the private sector, with an exemption for the first $75,000 in retirement income and enact a minimum age for the exemption.
Finally, we must implement a Full accrual system which would mandate that we pay our obligations as we go within the year in which they accrue.