The pension crisis in Chicago and Illinois

December 18, 2014
By Benjamin VanMetre

This letter was written by Ben VanMetre and featured in the Chicago Tribune on December 18,2014.

The Chicago Tribune’s editorial “A Democrat grooves his pitch; Illinois Republicans whiff” opened with three statements that are very misleading.

The Tribune claims that the Biss bill will “encourage personal responsibility for retirement savings, it would cost taxpayers next to nothing and it would enable a private-sector solution.”

False, false and false.

Although potentially well-intended, the bill does more than “encourage” retirement savings.

It’s a mandate.

The Biss bill mandates the cooperation of businesses with 25 or more employees that have no retirement program for their employees.

It mandates that every employee of a participating employer pays 3 percent of his or her paycheck into the program, unless the employee opts out.

The state treasurer’s fiscal note indicates startup cost over two years will range from $15 million to $20 million.

Only in Illinois is $20 million “next to nothing.”

It may not be a ton of money relative to the state’s total budget.

But in a state suffering one of the nation’s largest debt crises and slowest recovering economies, every $20 million counts.

Finally, the Biss bill is not a “private-sector solution.”

Again, the term “government mandate” comes into play.

The bill establishes a brand new governmental entity with a brand new governmental function: to establish and administer a mostly mandatory IRA retirement savings program for private-sector workers.

Everything Illinois state government touches related to retirement has completely fallen apart.

One needs to look no further than the five state pension funds that have only 39 cents for every dollar they should have in the bank today to pay for pension benefits.

Let’s hope Gov. Pat Quinn has learned that lesson and vetoes this bill.