Sunday, June 22, 2008

Future city workers could lose out on lush pension plan

I can only imagine some moans and groans or perhaps some cheers for those who don't want to pay taxes for these public service pensions. Sun-Times...

The lavish pensions that City Hall has been known for may become a thing of the past for new city employees.

Newly hired employees would shift to the 401(k) plans favored by private industry -- instead of the "defined benefits" enjoyed by their older co-workers -- under a plan being pushed by the head of Mayor Daley's pension reform commission.

Sources said the two-tiered pension system is the painful solution favored by Chicago's former chief financial officer Dana Levenson.

Levenson agreed to co-chair the 32-member pension commission to solve a crisis that threatens to strangle future generations of property taxpayers. The city's four pension funds alone have $10 billion in unfunded liabilities to employees and retirees. If they run out of money, Chicago taxpayers get stuck with the tab.

"I am not going to comment on anything about what we're doing," said Levenson, head of North American Infrastructure for the Royal Bank of Scotland.

Chicago Federation of Labor President Dennis Gannon and Fraternal Order of Police President Mark Donahue were equally reluctant to talk about reforms, for fear of violating a confidentiality agreement signed by commission members.

But when the Chicago Sun-Times confronted them about Levenson's idea, they could not remain silent.

"We knew before this commission was even formed that there was a potential desire to have a two-tier pension system for city employees," Donahue said.

"Unions have consistently been against such a plan. It establishes different benefits and creates different classes within your membership."

Gannon agreed that a two-tiered system would make it "very difficult to represent people. ... An employee is an employee -- whether you have 20 years, five years or no years."

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