The straight dope on CTA pension and retiree health care reform
We all know that the Chicago property transfer tax increased by 40% to help bolster the underfunded CTA pension and retiree health care costs. But let's now look at what CTA employees will have to pay now under provisions of the Mass Transit Funding and Reform Bill that passed in January.
Here are some of the pension reforms for CTA employees:
- The employee contribution to the pension plan increases from 3% to 6%.
- The pension fund must stay above 60% funded through 2039 and reach 90% funded by 2060. If additional contributions are necessary to meet these levels they are made 2/3 by the CTA and 1/3 by employees.
- For employees hired on or after the effective date of the bill, reduced pensions are now available at age 55 and 10 year of services. Previously, only three years of services were required.
- For new employees, full pensions are now available at age 64 (previously age 55) and 25 years of service.
- For new employees, CTA executive pensions are eliminated.
Here are the retiree health care reforms for employees:
- Active employees must now contribute at least 3% of compensation on a pre-tax basis. Currently they contribute nothing.
- Retirees and their dependents would contribute up to 45% of the cost of coverage (currently retirees contribute nothing and dependents pay approximately 20% of the costs of coverage).
- Health care benefits are now available to employees at age 55 and 10 years of services. Previously just three years of service were required.
- Retiree benefits would be no greater than 90% in network, 70% out of network (currently benefits include 100% indemnity coverage option).
I think these provisions move the CTA and its employees closer to what a "normal" business would expect its employees to pay for a pension and retirement health care benefits.
OK, now that this is somewhat settled...
F*CKING FIX "TOWER 18" YOU MORONS.
Posted by: Ryan | February 21, 2008 at 09:52 AM
Keep in mind that CTA exempt (non-union) employees don't receive merit-based raises/bonuses or overtime pay, and only receive cost-of-living raises every 2-3 years. So this is a major reduction in take-home pay (6%), pending whether or not there is a companywide 2008 cost-of-living raise (there was none in 2007, and no provision for one in the 2008 budget).
I'm all for making the plan solvent and financially feasible (it obviously wasn't before, with overly generous benefits and too small contributions), but CTA employees made a major sacrifice from the status quo to get this deal done.
Posted by: vivalfuego | February 21, 2008 at 02:12 PM
What WAS the issue at Tower 18 this morning? Luckily my Brown Line operator was kind enough to announce at Belmont that something was up and we should all get off the train and take the Red. Now THAT was a full Red Line.
But no word on what actually happened?
Posted by: Josh | February 21, 2008 at 02:22 PM
Blown fuse.
Posted by: painhertz | February 21, 2008 at 02:54 PM
it's worth keeping in mind that a huge burden would be lifted from the cta - and all other businesses that provide health coverage - if we implemented a single-payer health insurance system by extending medicare to everyone in the country. it would allow us to cover everyone and save a huge amount of money in the process.
http://razetheladder.blogspot.com/2008/01/hard-numbers-on-healthcare.html
http://chispan.org
Posted by: jake | February 21, 2008 at 04:10 PM
>>>
I think these provisions move the CTA and its employees closer to what a "normal" business would expect its employees to pay for a pension and retirement health care benefits.
<<<
When looking at how well compensated employees are, you can't just look at one aspect like their wage, or their pension benefits. You have to look at the whole package.
If you're paying 10% into your retirement plan, and I'm only paying 5% into mine, does that mean I'm better off than you? Not necessarily. While I'm paying less into my retirement plan, my wage may be below "market" for my job, and your wage might be more than "market".
And, of course, then there's the issue of the employer match. I once worked for an employer who matched 1 for 2, up to a maximum of 3%. There weren't many long-term employees at that company! Another company matched 1 for 1 up to 10%, but it was hard to move up at that company because they did such a good job of retaining long-term employees.
Health insurance after retirement is another issue. I've worked for employers who paid 100% of the premium after retirement for employees with 15 years. And another employer only paid 30% of the premium for those with 10 years.
And, of course, there are a lot of employers these days who've given-up on even expecting anyone to consider being long-term, so they have virtually nothing worthwhile for a retirement plan, and they don't pay a higher wage, either. And why should they? So many employees aren't smart enough to look beyond what they're going to get on the next paycheck. Retirement? Who cares!
The whole package is what matters, and how much of that is divided between current compensation, and a retirement plan tells you how much a company values long-term, experienced employees.
Posted by: Rusty | February 21, 2008 at 08:09 PM
RE: Tower 18
http://transitchicago.com/news/ctaandpress.wu?action=displayarticledetail&articleid=104720
"Work is expected to begin early in 2007 and be completed in 2009. "
Posted by: insider2 | February 22, 2008 at 10:56 AM
Wow, what huge sacrifices the union workers made! Next thing you know they'll be limited to only 3 weeks of sick time per year!
Posted by: Ralph | March 01, 2008 at 02:36 AM