Breaking: Unions Oppose City's Pension-Slashing Proposal

Fact Sheet on City MEABF-LABF Proposal

The following statement is attributable to the We Are One Chicago union coalition:

“The We Are One Chicago union coalition is opposed to Mayor Rahm Emanuel's pension proposal affecting participants in the Municipal and Laborers pension funds. Coalition members opposing the deal include the Chicago Teachers Union, AFSCME Council 31, and the Illinois Nurses Association – all of whom represent city and school board employees and retirees that would be directly affected—as well as the Fraternal Order of Police Lodge 7, Chicago Firefighters Union Local 2, the Chicago Sergeants and Chicago Lieutenants Associations, and the Police Benevolent and Protective Association Unit 156.

“The City’s proposal is an unconstitutional approach that makes onerous cuts to the pension benefits of nearly 50,000 active and retired public servants.  These cuts are all the more devastating considering that these cafeteria workers, librarians, health care employees, food and water safety inspectors, nurses and others do not receive any Social Security benefits. Many of the participants in the municipal fund are women of color in Chicago communities that are already struggling and facing tremendous economic challenges. 

“The following example indicates the damage done to their retirement security. An employee in the municipal fund retiring in 2015 would currently receive an average annual pension of $33,500 ($2,791/month).  Under the City’s proposal and based upon the City’s actuarial forecast, in 20 years that retiree’s pension will only be worth $22,700 ($1,891/month) in real dollars, which is less than 150% of the federal poverty line in a two-person household.  That represents a 30% cut in his or her pension. If retirees live longer than 20 years after retirement, the cut will be even more dramatic.

“In addition, the City’s plan would require all current employees to pay an additional 2.5% of their salaries—beyond the 8.5% they already contribute – for this greatly diminished benefit.

“The proposal has even more problems. Although the city claims it will increase employer contributions, it does not identify a new revenue stream or provide any assurance that sufficient revenue will be available to make full pension payments. The absence of this critical component – new revenue – could lead the city to continue its habitual, damaging trend of underfunding Chicago's retirement systems. Poor fiscal practices led to today's problem in the first place, even as city workers faithfully paid toward their pensions.

“Rather than raid the retirement life savings of retirees and average working people, it's well past time for the City to get serious about the need for revenue to sustain vital services while paying down Chicago’s legally owed pension debt. For decades, big businesses and wealthy CEOs enjoyed artificially low tax rates, but that illusion cannot go on if Chicago truly is to be a world-class city that offers education, public safety, health care, and other critical public goods.

“Employees want to work toward a constructive solution and are prepared to do their part to help solve the pension problem.  But we cannot accept an unconstitutional plan that places the overwhelming burden on frontline workers and retirees on fixed incomes.  We urge the Mayor and the City to engage in renewed discussions to negotiate a truly fair, constitutional solution, rather than pursue this flawed proposal any further.”

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