BLOOMINGTON — Bruce Rauner, a Republican candidate for governor, said the General Assembly needs to address pension reform and other issues during the upcoming veto session, but he is not optimistic.

“I’m not sure anything will be accomplished,” he said Monday, during a swing through the home territory of two of his Republican opponents, state Treasurer Dan Rutherford of Pontiac and state Sen. Bill Brady of Bloomington. The other announced Republican candidate is state Sen. Kirk Dillard of Hinsdale.

Rutherford also was in the area on Monday, introducing his running mate, Steve Kim, in Pontiac.

Rauner said “the economy, jobs and taxes” are what he hears about most while talking to the public.

A Chicago businessman, Rauner said resolving the government-employee pension issue is a key to many other problems in Illinois.

He favors capping pensions that have already been earned and moving government employees to a defined contribution, 401(k)-type of retirement plan.

“It’s what’s fair and affordable,” Rauner said. “Every dollar of excess pension … is a dollar that can’t go into other things.”

Making such a change would cut the state’s liability from $100 billion to $50 billion, according to Rauner.

He would start the change with lawmakers and judges. Other state pension plans cover state workers, teachers and university employees.

Rauner also is calling for a review and eventual overhaul of the state’s tax code, looking “strategically” not only at individual and corporate income taxes but also sales taxes, property taxes and various fees.

In addition to tax changes, Rauner said reform of the state’s worker’s compensation system — which he described as “a broken, corrupt mess” — is necessary to make Illinois more competitive with surrounding states, he said.

“If we don’t become pro-growth, nothing else matters because we’ll never dig ourselves out of this hole,” Rauner said.

Although lawmakers made changes in the worker’s compensation system several years ago, Rauner said, “they just nibbled around the edges” and didn’t address “the core issue, which is causation.”

Rauner said another way to attract business to Illinois and lower the unemployment rate is to permit “right-to-work zones” on a county-by-county or community-by-community basis. He said giving workers the flexibility not to join a union is a factor companies look for in choosing where to operate.

On education, Rauner favors providing parents with more school choices and prohibiting teacher strikes.

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(31) comments

wswsr

Amen. Current day Pensions place too much risk on the government municipalities. The risk needs to be borne by the individual.

The Unforgiven
The Unforgiven

Easy for the rich to say that the common worker has to gamble their pension in a 401k. A rich businessman will never be good for the working class, especially a rich businessman from Chicago. The young will never be able to retire b/c our entire retirement fund would be subject to flatlining at any moment like it did in 2009.

Nshape

EXACTLY. When I read the words "Chicago businessman," I knew the rest of the article would go south in a hurry. The rich have no clue how the rest of the world lives. They play the stock market with hundreds of thousands of dollars. Things like mortgages, paying bills on time, saving for vehicles, heck even retirement are just trivial b/c they are so rich that it poses no challenge to them.

dm1985

Your not gambling anything more in a 401(k) type plan than you are with the money in the hands of the state.

Pensions at corporations can work, not at the state and municipal levels due to so many constraints. Just make it so no new hire gets a pension.

The Unforgiven
The Unforgiven

Yeah, let's make it to where the old are taken care of but the young will never retire with a pension ........ great idea. You must be a baby boomer or already have a pension. The same old mentality of "I've got mine, Jack" and let everyene else go to the wayside.

Crybaby

Great idea. Further expansion of the 401(k)-type of retirement plan, originally marketed as a salve for fat cats, and further extending it to now cover all State employees. By handing their funds over to a salesman and practicing non-fiduciary, who charges a tidy fee for looking out for his/her own interests, the employee totally finances the plan, the employee totally assumes all the risk and, when the financial 'music' stops, thanks to the government 's beneficence making the fat cats whole when things go south, the employee is the only one left without a chair.


Hell, what could possibly be wrong with this plan?

thoughts a million
thoughts a million

My wife works at ISU and is not in the state pension system. She has her money in TIAA-CREF, manages it herself, and does not pay any fees. One of the big benefits is that it's portable, so she brought it here from her prior university, and can take it to another employer if we move.

real american

Ok, so it looks like some people do not agree with a 401(k) style pension system. I worked for the state for 10 years, you would be surprised at the number of rank and file state employees who would love to stop paying into the retirement system, and start using that money to fund their own retirement! It's the union administration that is against it. That being said, I will not be voting for this guy, just because he is from Chicago.

real american

If you don't like this plan, what do you suggest? I suggest taking ALL new state employees off the pension system, and making them work longer than 25 or 30 years. Did you know an 18 year old can go to work for the state, and retire with 75% of his/her final average salary at 48 years old? Furthermore, if he/she works alot of overtime, and saves all of their holidays, they can actually make more in retirement than they did working! Just sayin

The Unforgiven
The Unforgiven

Years of service is the only fair way to do it. If you start getting away from what's fair for everyone you just start getting into favortism and "what about that guy". I think 30 years of service is fair enough to call it a career and let somebody young into where you had a nice career.

real american

Nshape, what do you consider rich?

Nshape

Good question. I've read a lot of articles about what it takes to be rich, and it is much more complicated than simply a number. Rich, in my own terms, is the ratio of money amount to what you want/can do with that money. I've seen a poster on here "aspire" to make 45k/yr. The gov't says you're rich if you make 250k/yr. For me, netting about 90k a year would make me feel rich based on my current goals in life...and those goals may be changing soon as my profession takes a nosedive. I feel that once people make 300K and up is when they are too far gone to have any empathy for the common man.

NormalNews

Just watch for the slew of advertising from ASCFME and the NEA decrying this pension reform as unfair and cruel. The only people the current mess is unfair to is the taxpayer. The gold plated pensions need to be halted unless taxpayers want to pay 50% of their income to state retirees.

justagoodoleboy

Real American you claim to be working for the state but have no idea on how the retirement system works.
University employees can retire at any age with 30 years of service but will receive less than half their final average salary.
Rank and file state employees must work 44+ years to get 75% of their final average salary, or meet the rule of 85 (years of service plus age =85). If they meet the rule of 85 they then get a percentage of their salary based on their years of service muliplied by 1.67. For example an employee retires with 30 years of service at age 55 will get 30% of their final average salary.
If they are on the alternate formula they get 80% after 32 years of service but must be 50 years old.

bball111


How's the rich Chicago dems been doing for our state????
Not so good
Time for a huge change, this guy has my vote!!!

Billy B
Billy B

Definitions of 401(k)s from the Urban Dictionary:

401(k)
A scam used by the wealthy to rip off the working class.

"The market dropped so much that all last years contributions to my 401k have been wiped out. I'll bet the clowns that managed it made sure their big money clients didn't lose anything."

401KO'd
When something drastic happens in your life that causes you to take a serious financial loss. Economic downturn on a personal level.

Dude 1: Hey, we going to pool our money for those season tickets?

Dude 2: I can't man, I took a paycut and totally got 401KO'd.

2tired

Dude the majority of the tax payers that are paying for these government employee pensions are living with a 401K type pension if it's good enough for the tax payer it's good enough for the ones living off the tax payer

Joe Melugins
Joe Melugins

If I can't have a good pension, then nobody should. That kind of thinking just puts us all on a race to the bottom.

The other dave

It should be stated this way. If I can't have a good pension, why should I pay for someone to have one?

Joe Melugins
Joe Melugins

==t should be stated this way. If I can't have a good pension, why should I pay for someone to have one? ==

The other dave --
Because the pension system in place was a condition of employment when teachers, state, and state university employees accepted their jobs. The pension is part of the overall compensation package. And it is part of a contractual relationship.

The Illinois Constitution states that public retirement systems are a contractual relationship whose benefits are a contractual relationship whose benefits cannot be diminished or impaired. And under contract law if one party wants to change the terms of a contract - they have to negotiate those changes with the other party.

We all benefited for 20 years with a superficially low 3% state individual income tax rate, because the General Assembly skipped and modified the employer's pension contributions in order to keep taxes low. Even the current 5% rate is lower than 32 other states top rates. But now its time to pay up for that low artificial 3% rate we all benefited from.

Chadwick Snow

Ultimately, for new state employees, a defined contribution plan will need to be put into effect. The state pension system was hit with a double whammy: 1) the skipped contributions and 2) a downturn in investment returns that they did not see coming nor planned for. A defined benefit program places a 100% of the risk on employers unless they can control the payout to those receiving pensions. The Illinois constitution prevents much being done to existing retiree benefits and it's iffy concerning what can be done with those enrolled in the system and still working. Even with a 401K type system, the state will have to match contributions. So, the return to the state is in controlling future benefit payments. That will take some time to kick in. In the meantime, the 5% income tax will become permanent to cover the increasing outflows from the system.

dm1985

Crybaby-

You obviously are not educated on how "non practicing fiduciaries" handle 401(k) plans. I am an advisor and yes we get paid, I don't work for free. First off, when handling 401(k) money fiduciary doesn't even begin to explain the kind of regulation we face. Second and most important, do you think an advisor could take money from the plan to pay other bills as the state obviously did? I'd say it'd help the state, and the participants.

And whoever said that a defined contribution plan would transfer risks to the participant? Doesn't that sound great as opposed to Oppenheimer/IL?

The other dave

This is a great idea. I just wish my SSI was put in a 401K type program. Actually, if only half of the approximately 15% of my income given to Social Security were put in a 401K over my career, I would have far more money saved for my retirement that Social Security. Plus, the other half of my withholding could be given to the 47%.

Nshape

You contribute 6% of your income to SS.

Interested

And your employer contributes 6%, 6%+6% = 12%

exrepub

Oh but when you are retired you are part of the 47%. And I can tell you are full of baloney. So you must be part of the 1% or think like the 1%.

Nshape

What people need to realize is that a 401K is kind of a craptastic means as #1 retirement source. Like someone mentioned below, it was mainly used as a little extra bait to get a CEO candidate to accept the job. "Here's your multimillion dollar salary, your PENSION, your stock options, your flex time, your company car, your golf clubs, and meh, we'll even throw in a 401k if you come work for us". That's all it was ever really intended for, and now we are all supposed to fawn over this as some sort of kick butt retirement plan? NO WAY!!

exrepub

I think a rich person could say a 40lk would be a good pension. Because if it falls/declines they have something else to fall back on. Other people don't. One only has to remember all the money that was lost a few years back when the stock market fell.That could happen at anytime especially since we have such reckless leaders in the mix. Can you imagine if that had been your entire pension. Oh I know you should have a bunch in savings to fall back on. One person told me you should have a million dollars before you retire. A rich person of course. Some do not make a million their entire life. So how could they save a million. Again it is the mentality of rich people and pensions are most important to those who are not rich. To others it is just something to stick in the bank every month.

Billy B
Billy B

Rauner, with his stance against public employee unions sounds like a Walker-want-a-be. Perhaps then, Rauner should look to the North to Wisconsin for pension ideas.

Wisconsin has the best funded state pension system out of all 50 states, despite the fact that its teachers and state employees contribute far less out of their paychecks into their pension system than do their Illinois counterparts.

The Wisconsin legislature in 2011 increased what public employees must pay toward their pensions. Before the law passed, workers paid less than 1 percent of their salaries –in some cases nothing – toward pensions. Under the new law, public employees pay 5.8 percent to 6.65 percent. PENSION BENEFITS THEMSELVES WERE NOT CHANGED.

Most Illinois public employees already pay more than that. Teachers contribute 9.4 percent to their pensions, state university employees pay 8 percent, judges pay 11 percent and legislators pay 11.5 percent. State employees pay 4 percent if they also contribute to the Social Security system and 8 percent if they do not.

However, the State of Wisconsin has made all of its employer's pension contributions, unlike Illinois which often modified or skipped its annual employer contributions. And how did Wisconsin have enough money to make those pension contributions?

Individual state income tax rates:

Illinois: 5% (after being 3% for 20 years)

Wisconsin:
-- 4.6 percent on the first $10,070 of taxable income.
-- 6.15 percent on taxable income between $10,071 and $20,130.
-- 6.5 percent on taxable income between $20,131 and $151,000.
-- 6.75 percent on taxable income between $151,001 and $221,660.
-- 7.75 percent on taxable income of $221,661 and above.

CLG4
CLG4

Repub, you cannot be so ignorant to write what you do about the poor and 401k. A young person age 21 making 30,000 his whole life and contributing 31.25 his whole working life no more no less and retiring at 65 would see his 401k balance just over 900,000 dollars. Now if we could keep the democrats from trying to manipulate the economy by printing money his total may even be higher. You should keep you mouth shut instead of opening it to show the world what a uneducated mouthpiece sounds like. Your a joke sir.

wswsr

Rauner's the only opportunity we have to deal with the Chicago machine being a non-career politician. Wealthy or not, he owes nothing to unions, thank goodness , nothing to Springfield or the demos in Chicago. Can't be our governor too soon.

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