The Chicago Teachers Union (CTU) released on Feb. 17, 2014, a report examining the true impact of pension cuts on the public sector workers living in our city’s neighborhoods. Three of the top four employers in Chicago are the City itself, the Chicago Public Schools and Cook County. These three entities employ over 90,000 people, all of whom depend on public pension plans to ensure dignified retirements and stable communities. The mayor’s proposal will amount to roughly $270 million in cuts to retirement income over a period of just five years.
“The Great Chicago Pension Caper: Neighborhood Destabilization in an Age of Austerity,” was authored by CTU’s Research Department. It shows that when Senate Bill 1 is used as a model for so-called pension reform, teachers, police, firefighters, librarians, social workers, engineers and other public sector workers in Chicago are likely to see their retirement incomes reduced by at least 10 percent over a 20-year period. Pension cuts will immediately harm retiree livelihoods and also disrupt current city workers’ retirement planning.[SB1 is the pension cutting legislation passed by the Illinois General Assembly. If it survives legal challenges will reduce pension benefits for hundreds of thousands of workers in the state pension systems.]
“This report demonstrates the unintended consequences of misguided pension reform,” said CTU President Karen Lewis. “SB1 and proposals similar to this will not fix the problem. We need sensible revenue solutions. People need to understand that our retirees do not receive social security and have to pay for Medicare Part A out of our own pockets. We must put an end to this pension caper so that people can survive in an economy that is not kind to older Americans.”
Current public workers will have their pensions reduced the most. Many will face a nearly 20 percent cut in anticipated retiree income over their first two decades of retirement. These cuts will negatively impact not only public workers’ quality of life, but entire communities.
“The Great Chicago Pension Caper” also shows:
- The pension benefits earned by teachers support roughly 6,000 jobs in the City of Chicago alone.
- SB1, as applied to the Chicago Teachers’ Pension Fund, will see an average cut totaling about $700 per month, or a 20 percent reduction in the average CTPF benefit of $42,000 per year.
Retirees living in the city’s majority-black zip codes earn more than $600 million in annual pension incomes from the four public funds. The African-American middle class in Chicago will be the hardest hit by reductions in retirement benefits.