ILLINOIS STATE PENSION CRISIS 2016
This document discusses proposed solutions put forward in 2016 by a group comprising Mariam Sadek, Mark McNicholas, Miguel Aguilar, and Elliott Igunbor to address the ongoing pension crisis in Illinois. The solutions aim to provide insights and recommendations for tackling the pressing challenges faced by the state's pension system.
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ILLINOIS STATE PENSION CRISIS 2016 Proposed Solutions Mariam Sadek Mark McNicholas Miguel Aguilar Elliott Igunbor
CONTENTS The Current Pension System The Solution Debt Management Generating Income Alleviating Public Outcry Preventing Future Disasters
The Current Pension System > Pension benefit payments based on end-of-career salary > Pension contributions based on fixed percentage of employee s salary
The Current Pension System Retirement benefits are unrelated to contributions. Pension benefits are an unsustainable burden on the economy.
THE PROBLEM? The Current Pension System
The Current Pension System 1. Lack of connection between: > Annual contributions to the fund > Promised benefits upon retirement > Fund Management 2. Retirees 30+ years of service promised to receive average $2M 3. Resulting debt facing the state upwards of $300B
The Current Pension System 1. Corruption in Management 2. Average Retirement Age & Duration immeasurable 3. Debt facing the state upwards of $300B
The Current Pension System Stop giving incentives to retire early because people are living longer, which means government retirees are collecting more retirement benefits for longer than in the past.
The Current Pension System The workers can retire early then work else where and earn income while receiving the city retirement income.t
THE SOLUTION? Debt Management Generating Income Alleviating Public Outcry Preventing Future Disasters
Debt Management 1. Compose financially feasible plan: > Modify unreasonable expected returns on investment activity > Reinforce seriousness and patience required > Budget, prioritize, and reduce expenses 2. Engage in Responsible Investment Activity 3. Act Ethically and Empathetically
Generating Income 1. Legalize & Invest in Medical Cannabis: > Growing billion dollar industry > Commodity Investment > Many unexplored medical benefits 2. Tax > Implement tax on marijuana sales 3. Allocate funds to underfunded Pensions > Washington state cannabis sales reach $660M+ >$126M in tax revenue
Generating Income 1. Medical Marijuana sales in Illinois: > 8 licensed dispensaries in the past month >Illinois patients legally purchased $1.7M in November and December. 2. Proven Medical Benefits >Relief from disease symptoms, chronic pain >Therapeutic potential 3. Legalized in 23 states >Local municipalities benefit from tax revenues >Legalized in Pennsylvania yesterday afternoon
Alleviating Public Outcry 1. Acknowledge impact on retirees: > Unexpected financial strain > Broken promises > Reduced buying power 2. Create awareness > State-wide campaign to promote care for elderly > Encourage and inspire millennials > Support from local celebrities 3. Sales & promotions > Support from local retailers
Preventing Future Disasters New Jersey Illinois - - Eliminated part-time employees eligible for pension plan Give city workers a self- managed 401(k)-style retirement plan and Social- Security-like benefit - Rolled back expensive benefit increases approved in 2001 - Make retirement costs stable and predictable portion of Chicago s budget - Increased employee contributions for health benefits - Protect taxpayers from paying for increasing taxes to cover ever-growing pension short falls
Preventing Future Disasters 1. Emphasize ethics in hiring process 2. Regular supervision of pension contributions > Shared responsibility and shared consequences 3. Create transparency in pension fund activity
