Pension Buyouts?
This is a....novel concept we suppose:
A new bill would give some police and firefighters flexibility with their retirement. State Sen. Robert Martwick, D-Chicago, filed Senate Bill 3404 which would make a “pension buyout” available to members of Chicago’s pension systems as well as downstate police and firefighters.
Of the worst funded local pension systems in the nation, Chicago-area pensions take up seven of the bottom 10. In September, the city had to lend money to the firefighter’s pension fund to make that month’s payouts and avoid selling assets.
A “pension buyout” allows government workers to take out a portion of the “net present value” of their pension – the amount needed today to fund a retiree’s lifetime benefit. After voluntarily “cashing out” all or a portion of their benefits at a 30-40% discounted rate, workers can roll the money into an IRA or 401(k)-style plan and control their money forever. In return, the discount equals savings for taxpayers.
Needless to say, anything with Martwick's name attached to it is suspect.
We imagine the calculations used to do this are a bit on the suspect side, too:
- The flexibility allows retirees to withdraw a larger amount at one time – such as using the funds to pay for housing or medical expenses – a vital option for some based on their circumstances, but one which they don’t currently have. Plus, a self-directed account can be willed to family while a pension cannot. Other retirees might desire to take the buyout because they are not confident in the stability of their pension funds.
No one has much confidence in Illinois pensions, that much is for certain.
Having confidence in politicians being able to solve it is probably even less.
Opinions?
Labels: pension
posted by SCC at 12:03 AM
97 Comments:
Depends on your expected life left in years. The NPV assumes you will die around age 75 if you are a male. If you live to 95, not cashing out might have been more prudent. The big issue is long-term pension solvency. Even if Chicago becomes insolvent, bond holders will likely take a bath with a light haircut for prospective pensions.
On paper it might sound ok, but if bad economic times come, stock markets crash, your 401K will sink.
And how well they calculate the value of one's pension? A retiree doesn't know if he will live 2 years or 40 years. Plus, with the new COLA, the value goes even higher but knowing the State, they will undersell or underestimate the true value of your pension today.
I left an old job and had a pension. I opted for the payout and rolled it into my IRA and invested it around 2019/2020. Did fine but a stream of guaranteed income is still very attractive though. Big concern is long-term inflation in the country because of our $38 Trillion in debt. That’s why gold is $4,900/ounce - it’s an inflation hedge.
The worst is the people on here posting that you better work until 65 or whatever it is because there will be no pension. Lotsa retarded cops that got married and realized they are fucked. No thanks. I’m tier 1 baby any I’ll cash all my checks in your honor!!!!
USS Chicago has taken a broadside of torpedoes and dive bombers have rained strike after strike. There is no saving her now. She is going down. Sad fact is that all the torpedoes and dive bombs were from our own leaders. They give a whole new meaning to “friendly fire.”
SCC:
Before people shit all over this, please understand that this is a very smart option… for a few people… depending on their circumstances.
Willing the $ to a beneficiary for example, especially via a trust, can have sizable tax implications as well as flexibility. Is this for everyone? Oh fuck no. Could it work for a dual CPD or CFD pension household? Yes. Also it might be good for someone who’s much older than their spouse or younger.
Well versed in pensions here. Would this be everyone’s cup of tea, certainly not. But anything that expands the options we all have is a good thing.
Fop rep here. If 500 people retire a year and only 5 opt to do this, that’s only 1%. But if it’s better for them, it’s worth it.
Pass this and the DROP please.
I believe there is one such town that has done this already. It allowed I believe police or fire the choice to take the fully funded pension after retirement or take 1 million dollars up front. Once workers chose to take the million, the rest is on the shoulders of the worker, absolving the town or the city of any further responsibility.
The end is in sight and now the money is gone.
If the actuarial calculations are correctly representing what your current value is of your individual pension balance,, I would absolutely cash out completely. Taking 100% of "X" today is much better than a promise of getting an accumulated total payout of "Y" over the course of years, especially given the house of cards the current pensions are built on. Now you can control your future.
Forget the supposed promise of the pensions under the Illinois Constitution. When the pensions become bankrupt, the courts will have absolutely zero ability to force the city or state to sell hard assets like buildings to pay the pensions. The pensions will simply default, and checks will stop.
IRA or 401K funds ARE FULLY TAXABLE are they not?
Spouse was forced into private sector pension coversion after 20+ years of service, but continued working another 16 years afterwards. Always better if employee actually has control of investing options. Would likely have greater investing results starting earlier in career. Big Qs for POs/FFs: What happens when injured (duty vs non-duty) to the extent you are severely limited or can not return to work and the income stream stops? Where and how long does work-comp work? How where and when would SSI be of any benefit? Any other disability / dismemberment insurnce benefits? Definitely check with a good financial advisor - and - trust / estate lawyer before making any final decisions. Past performance is no gurnatee of future results - Your results may very.
Dumb idea after working for 30 years for this NO GOOD, thieving city!
Fuck you and pay me!!!
Beware of anything that Martwick proposes.
Maybe if the politicians made their payments in time. And hire the 2200 officers that they’re down.
No, How about that they are compelled to live up to their contract. I did everything I was supposed to do for 31 years to meet that contract. Now the Government is giving away my money to whole groups who have produced or have given nothing like it is their obligation. We are the people who that are obligated to fund. It was a reciprocal agreement. Now I have no understanding for anything less than the full payment back as agreed. I earned it for years.
More Fuckups by the city.
Man.. these are the dumbest bastards anywhere:
City forgets to take out pension deductions from Fire dept. retro-pay.
https://chicago.suntimes.com/city-hall/2026/02/13/back-pay-chicago-chicago-firefighters-paramedics-administrative-mistakes
What is martwick’s position on taxing pension ? Is he pushing for it?
The pension will be dead in the water by 2035 if it lasts that long. Too many idiots running it and too many have put their hands in it in the past to take their fair share. Hopefully you don’t mind working again if you retired already. And I’m sure there will be legislation soon not to guarantee it anymore
If Martwick’s name is on it then it’s designed to screw us for sure
This looks a lot to me like Step One. Step Two will be everybody in those failed pension systems are FORCED to take the haircut and the buyout.
That idea is not in the best overall interest of retiree's just take your regular monthly pension payment. Also your pension is guaranteed in the Illinois constitution and if you have time in the job or retired you know we already fought that fight in court.Lets also remember that politicians are not going to do anything to screw you out of your pension or alter it because they could not do it for just one or two classes of people it would also affect their pension and everyone else's.
Gold is your friend
That is why you need a strict Sell discipline--To avoid BIG losses.
They are for federal income tax, but NOT for Illinois state income tax, just like pensions and social security.
This sounds all good, and wonderful, and nice.
HOWEVER ...
Do they have enough money to fund all the buyouts?
Is Martwick trying to get enough people to withdraw a lump sum so the pensions become insolvent and the feds pension benefit corporation has to take it over?
absolutely
Having the finest DEI hires running our fund and where the investments go helped this downfall. If you point out who's running things your racist.
100percent agree!! I held up my part of the bargain for 29 years....just so these thieving lying fucks can claim there isn't any money for my pension, whoops sorry officer. Take your excuses and shove them up your asses. FUCK YOU, PAY ME WHAT IM OWED. PAY US WHAT WERE PROMISED FOR GIVING OUR LIVES TO THIS UNAPPRECIATIVE CITY.
Anything that allows you to remove money from our already underfunded pensions is not a good idea. Not to mention the lawsuits the crybabies are going to file against the pension board when they LOSE the money by making shit investments. Yes, when they lose their money, they'll turn around and file suit by claiming they were never warned about making shit investments. Same crybabies, blame everyone else for their own stupid shit decisions...
Take the payout.
I read this when I was a kid: A bird in hand is worth 2 in the bush.
One of the best and most generous pensions in Illinois is that of our esteemed state legislators. When they sign off on this deal for themselves then I might consider it.
Most would need a $2M payout to take 5% a year which is a $100k a year. Anything less would be losing money.
Taxable federally, the same as your pension.
Yuuuuuuuup! One copper on the watch pays his ex-wife $2300 a month(twenty three hundred) in alimony. The ex-wife found a tatted criminal Chad and supplies him booze with copper’s alimony cash. A sucker is born every minute!
"Needless to say, anything with Martwick's name attached to it is suspect."
True.
This is another one of Martwick's moves to pander to Lodge 7 leadership in securing another endorsement, which they've done numerous times.
Also never forget besides being a partner at his father's properly tax appeals law firm, as Dem committeeman for the 38th ward, Martwick has supported radical leftists like Delia Ramirez in Congress & was a full throated supporter of the Safe-T Act.
Nothing is guaranteed!!!! Remember Rostenkowski?
As per Public Act 99-0506 (2016) the Police/Fire pensions will be funded at 90% by 2055. We'll see if the city can afford the annual payments.
paywall
You damn coward. "FOP rep here" and you post as "anonymous". You are a coward. Being a rep you should be willing to post your name if using your position as some type of authority on the issue. Please, just STFU and crawl back into the CAPS office. I am not a rep so I post accordingly as "anonymous".
Before someone does this they better be sure they are convinced that the current plan is going to collapse. First take the proceeds from the buy out and multiply it by 5%. For each millions you can probably count on $50,000 a year. How many millions do you need to equal your pension? Do you have the discipline to not touch the corpus during your lifetime? It might work out, but you have to remember the market goes up and down. Your kids will appreciate the inheritance.
Of course, when you finally cash them out. When you roll them back and forth into different retirement accounts they are not.
Gee Wally, can’t we just get a democrat in the White House again so they can tell the fed to print up some more money?
Who do you trust?
Hope you already have a herd of Buffaloes.
For our Article 5 pension with $3.6B in assets there needs to be a cap of 25 officers a year because any amount more would collapse the fund. But it is a good idea for some officers to take advantage of for following reason.
1.Sickly
2.Livin' it up lifestyle
3.Has another pension from military, park district, city colleges etc.
Trust yourself - NEVER TRUST THE GOVERNMENT.
Forget all this "pension" bullshit - too rife with thieves, parasites, and manipulators to feel confident about actually getting the money.
I'd much rather have a 401(k)-style plan where I can set aside MY money in MY account and manage it however I see fit - to my benefit or detriment. Then if the Government happens to have some cash around at the end of the year *heh heh*, they can give me a contribution based upon my salary, and I can invest that too.
I'd invest it and make much more than those scheisters. Let me do the same thing with that other bullshit ponzi scheme: Social Security.
COLA's sound nice, but ultimately aren't based in reality - they're based on newbies coming into the fund to kick in funds to give to retirees... aka Ponzi Scheme.
Take your money, invest it properly, put it in a trust and leave it for whomever you want instead of the scheisters taking what's left to use for their purposes.
and what can possibly be wrong with a democRAT politician saying "trust me, this will work out better for you?
Recent retiree here. I clear $6500 a month/$78k annually. It would take me 12.8 years to recoup a million dollar buyout, putting me at 68 years old. My genetics, combined with my semi-healthy lifestyle indicate/predict I’ll be good for +/- 20 years past that.
At the end of the day, everything in life is a gamble. I might get struck by lightning or trampled to death by a stampede of gerbils fleeing The Keesing Bandit’s pretty loft. That said, I paid attention to the smart old timers and invested in both Def Comp and several outside vehicles, assuming that our pension might either be gone completely or greatly diminished at some point. So for now, the pension and scheduled COLAs (with which the current FOP thieves had zero to do… except ride the coattails of the previous administration which put it all into motion) make life pretty comfortable. Millions in other accounts make like divine. All it takes to ensure financial stability post retirement is some discipline, a bit of special employment or a side gig and not living like a hedonistic ghetto pooch.
Assume you’re not going to receive what was promised to you. After all, promises were meant to be broken and the Shitty of Chicago and State of Illannoy are not to trusted.
Retirement income is not subject to Illinois tax YET.
They will be once the law is passed by the majority party; the DEMOCRATS.
AFTER ALL.. they are not scared to pass the vote, the dumb bastard voters of Illinois will continue to vote for them.
FOH FU PAY ME... NO DEAL! They got the money just playing with the numbers....Sell Stock in Ohare and Midway...hell sell your momma!
Gacy had an accomplice. Google it.
I’m almost dead I’ll just keep it where it is.
If these pensions go under it will get ugly in the city.
BJ the ghetto mayor is trying to sink the pension faster on purpose. He knows he’s gone next year and that will be his final FU to the police.
He’ll, he couldn’t even keep the Bears in town.
Is anyone else losing sleep over this?
They cannot just do that it’s guaranteed and the state would just have to add new taxes or courses of revenue
15 years ago they said it would be insolvent by 2022…..
There's a 3% COLA now, so it would have to be more than 2 million for me to accept that
https://www.lawofficer.com/police-officer-mortality/
Expected lifespans after retirement are unpredictable. Save this article if you are going thru divorce. It will help lower the value of your pension as an asset.
Great. Take a buyout. Then your spouse files for divorce and you have to give half or more to them.
If you are married, and your spouse is all excited by this buyout, you might have something else to worry about.
You sound like a lot of fun. Good luck if you make it to 68.Your family will thank you for your investments.
With civilization that will never happen.
And when there’s no money to pay you what you’re owed? What else besides fuck you pay me? What will you do?
Yeah what do you do when there is a “market correction” and you loose 30-40%? Hold them to what they owe us it’s a better deal for us.
Collecting just over $100k a year now at 58 yoa. Parents lived into their 90’s so I have a long road to go. Without the colas it’s over $3M. I’m not taking $1M unless forced too.
They are basically saying, we will give you some of the money we owe you so you can invest it with someone else who might do a better job of managing it than we can or will.
In what other circumstance does government do this?
https://www.lawofficer.com/police-officer-mortality/
Many opinions on how long we will live
Assuming that you are 56 and live until 90 and a 4% discount rate the present value of your pension is 1.4 million.
You can plug the following into any AI and get the present value: annual pension payment, number of years that you expect to live, discount rate (IRS publishes this for pension calcs) and it will tell you the present value.
You would roll your pension into a Traditional IRA and name beneficiaries so you don’t need a trust. If anyone other than your spouse inherits your IRA they have 10 years to empty it out and pay the taxes.
Distributions are taxed at the federal level and you could choose to convert to some to Roth.
That is 100 percent correct.
Where do you get that DEI hires are running it? You are doing Vanecko was DEI long before DEI was a thing.
The idea that they passed the COLA to hasten the collapse of the pension fund had crossed my mind....
Almost 70 percent of divorces are being filed by women, and "gray divorce" (divorce after 50 or after 20 plus years of marriage) is also going up.
They will have to. They will raise taxes
another tid-bit to keep in-mind is that the national communists (aka democrats) have for many years lusted after private retirement accounts. I remember reading articles around 2001 or so in the WSJ about how the left has plans to someday confiscate all private retirement accounts and just merge them into social security. The current value of private retirement accounts (401Ks, IRAs, private pensions) is about equal to our current national debt of $39T.
All they need is a manufactured financial crisis and this becomes more than a pipe-dream. What's that about never letting a good crisis go to waste?
If the city goes bankrupt' the bondholders are the first to be compensated, everyone else is second and that includes the city's retirees
Guarente'd! If the city goes bankrupt who will pay? Will the city or the state? No where in the law does it say who pays. The State of Illinois does not allow cities to go bankrupt. Besides, if the city goes BK, the city's bond holders are paid first. That's not to say that this can change in the future. If the pension fund goes bankrupt, what will happen? A Federal Judge will decide. What been the track record on Federal Judges, not very good.
FU pay me!
I’ll stick with the pension remember that Detroit bankruptcy first responders didn’t lose much! I’m going on 25 years with the 457 and the wife’s job. I’m keeping my pension. Don’t forget all the money spent on illegals… FU pay me.!
You’re smart. So am I. Anyone who has any smarts knows you never, ever give up the benefit payments of a defined benefit plan for a reduced lump sum. Certainly not a the level of our pensions. Came on late, made sergeant after two tests and left at 63. Broke 10Ok last year plus social security this year-waited until 70 to start at 29K! Geez, you’d think I retired as an exempt! And then there’s my Contra Fund! OMG! Call me Rockefeller! Yup, just another copper. Why am I wasting my time gloating when I should be picking out my Bentley!
Detroit got 12,cents on the dollar you moron.
**Anonymous**
And when there’s no money to pay you what you’re owed? What else besides fuck you pay me? What will you do?
2/15/2026 08:13:18 AM
For starters....GFY. Secondly, I will continue to fight like hell for our pension. What will you do? Sell out?
If the ex wife gets a portion of my pension via QLDRO, and I take the buyout, then jokes on her when I retire. No pension for you!
What town?
Fight like hell? That’s your solution to the pension crisis? A blanket statement with no real answer. Got it. I’ll take the payout, dump it into my own retirement account or investments and control my money the way I see fit.
Well, I watched a documentary on that years back when it happened. They were talking to a retired Detroit copper who said his pension was being cut to $1000 a month. Said he might have to sell his suburban home and buy one of the vacants on his old beat.
I'll take that million. New Escalades for me and wife, top of the line kicker boxes and rims, hit the casinos, pay cash for that new crib in Matteson. Figure It'll last me about a year, maybe, 2.
Remember the democrats see private property as a tool of oppression.
No
that is why you do not get married
Overall this is a dumb idea.
If it is from Martwick. Be afraid, be very afraid.
Retired as a PO 5 years now, just getting into the “city money” , banged def comp for 30 years, invested in real estate and the market. Rode the highs and the lows and now sitting with 7+ mil. No payments and the only bitch is TAXES. Never did a Roth conversion and not worth it now so It’s really a hard fight to keep your money in retirement . But that all said, give me a buyout and I’ll invest on my own .
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