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Illinois Police Pensions/Benefits

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  • ChiTownDet
    replied
    Getting old sux. as I repeated just about everything I had posted in an earlier post. Oh, well....

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  • ChiTownDet
    replied
    The Deferred Comp (457) plan is usually in addition to your pension plan. You can put away a certain % (7%, I believe, may be wrong, though) of your pay max per paycheck. You can always lower or raise your deduction, but never saw a PD that matches your 457 contribution. You also can't get that money out of your 457 except for some emergencies (and as a rep told us, "If divorce was an emergency, we'd have no money in the fund with you guys."

    You are also able to have that money go into different mutual funds (or keep it in the fixed), but can only change it a certain number of times per year.

    You can start deduction as soon as you retire (50-old tier, 55-current tier retirement). You have to have all the money out of that deferred by age 70 (or have reinvested it). Oh, BTW, in your last 3 or 4 years before you retire, you can play "catch up" by putting three times the max allowed into the deferred comp per check.

    I had $100 per check going into deferred comp since 1989 (and being it's not taxed when deducted, it was about $60 less net pay per check). Never raised it, did play with the fund investment options a few times. Ended up with as of today, $140K in it.

    Highly recommend getting into deferred as soon as you get hired. If you start putting in immediately, you'll never miss the money taken from your check. You can always lower the deduct if times get tough, or put the next couple raises into it. There are guys I worked with that had $500K- close to a $1M in their deferred comp.
    Last edited by ChiTownDet; 06-30-2014, 01:48 PM.

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  • Fed27yrs
    replied
    ChiTownDet ~ Great information, hopefully the young guys pay attention. I can only tell you that on the Federal side (Thrift Savings 401K) part of a three tier plan including a percentage of high three salary and Social Security...The most important component is starting early in the 401K with a match. Can't pound that home enough! I'm trying to figure out the 457 and Illinois suburban pension plans..Thanks for the info you have provided!

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  • ChiTownDet
    replied
    From what I saw, Univ of Ill Police got the same pension as a municipal P/O (max 75% at least 55 yoa). The changes to pensions I've read always had a disclaimer that it would not effect suburban P/O & F/F , Chicago Police & Fire, or Univ. of Ill Police. One of the last ones didn't have U of I P/O's in it and they went to time on job the same as any other Univ employee, which I believe is 67 years old. Lucky you did get on a burb when you did.

    When you went the burb, were you still on the 50 yo tier or the 55 yo one? Also check if it would be advantageous to you to buy those 2 years towards your current pension (Pension portability). Longer you wait, the more it would cost.
    Last edited by ChiTownDet; 03-07-2014, 01:15 PM.

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  • chihopefull
    replied
    How did the State of Illinois retirement system change for the college police officers. I used to work for a state college downstate and that is what they used to get people. They would say they had better pension and free health care. I left 2 years ago before all this happened to a chicago suburb thank god.

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  • T.F.C.
    replied
    And I fully agree that everyone should be in deferred comp. I started with $100 a check in the academy was raising it with each increase we got until our contract ran out in 2012.

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  • T.F.C.
    replied
    I'll give you a small snapshot at what the ISP had when I first started. They changed after my class into a Tier system with longer working requirements and then as you all are aware changed again a few months ago when the state decided to "fix" the pension.

    When I started, you needed 26 years and 8 months on the job to obtain a full 80% pension (of your last days pay (current pay of a senior master trooper at 26 years is $111k) or the average of your highest 4 years in a row (lots of OT, lets say $130k)). You also needed to be 50 years old to collect. At that time, we paid 12.5% of every dime we earned into the pension system (OT, regular pay, etc).

    With the change and my age, I now need to work 5 years more and can collect my "full" 80% on a maximum of $109k no matter how much I make with the department. That means that if you are promoted at all you will no be able to make 80% of your salary, hence in many troopers eyes, no reason to get promoted.

    I think this is the case in at least a few, if not most departments but we also have a mandatory retirement age of 60. Therefore this latest "change" to the pension system has pushed people beyond that 60 year age mark to obtain the "full pension" they were promised upon being hired.

    Obviously lawsuits are pending.

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  • ChiTownDet
    replied
    Especially for younger guys, new otj, without home mortgage interest deductions, or heavy medical deductions, it's the best way to knock several thousand $$ off your gross and lower the tax bite each year. If you start it as soon as you start, especially a small amount ($100-$200 per check), as your pay goes up (and it goes up quickly most places within that start to 3yr-5yr mark: the raises seem to fly at you with the step increases and union contract increases) you won't even miss that money.

    Here's the max amounts that you can put into your deferred per year (From Nationwide Deferred - City of Chicago )

    2014 Deferral Limits1

    Standard Deferral
    $17,500

    Age 50+ Catch-up
    $23,000

    Special 457(b) Catch-up
    up to $35,000
    Last edited by ChiTownDet; 03-06-2014, 10:49 AM.

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  • dogcop
    replied
    Def comp can be a "risk" depending upon what risk you want to take. Back in the late 90's early 00's it was booming and I was literally almost doubling my money. Then the crash happened and I lost thousands in a few month. I got gun shy and then had them move it into a fixed interest earning. I'll probably get adventurous again. In simple terms, the younger you are the more chance you can take, the closer to retirement, have it in safer investments. Either way, unless you want an early withdrawal penalty, you can't take the money out until retirement age anyway. So money in a 457 is not liquid, it's an investment. The best way is have pretax 457, so that lowers your tax burden in the mean time.

    Edit: I didn't read ChiTownDet's answer word for word, and I went back to read it and see he covered the points better than I did. Ha
    Last edited by dogcop; 03-06-2014, 10:16 AM.

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  • southpaw26
    replied
    Oh okay...that makes more sense to me @ChiTownDet. I think I was confusing the two. I'm glad to see this is benefiting current officers as well^. I don't think we could go wrong with smarter investing for the future (now) and I might thank you hopefully 25 years down the line too, lol!

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  • StephDakel
    replied
    After reading the above post I think it's time for me to sign up for deferred comp. It just seems like the smart thing to do considering the long term benefits.

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  • ChiTownDet
    replied
    No Dept that I know of matches your contribution to a deferred comp plan. It's either put in a more or less fixed fund or you can decide how to divide it and what mutual funds you can put it in that are part of your dept's deferred comp company.

    The Dept makes a contribution to your pension fund. The pension fund trustees decide of how to invest that money to get the highest return for the fund.

    Just in case some aren't clear, a PENSION fund is what you will be enrolled in when hired. DEFERRED COMPENSATION fund is a voluntary money contribution you can enroll or not enroll in.

    You cannot withdraw money from your pension fund. You can from deferred comp, only under certain circumstances and with a heavy penalty. Pension fund contribution, as of now, in Ill is 9% of your pay. Deferred comp you can raise or lower your contribution each check. You can put $50 a check or up to a certain % of your pay. Both are deducted before your pay is taxed. You pay tax on them as you are paid out after you retire.
    Last edited by ChiTownDet; 03-03-2014, 04:53 PM.

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  • ChiTownDet
    replied
    Read next post.
    Last edited by ChiTownDet; 03-03-2014, 04:56 PM.

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  • illiniguy929
    replied
    I pay close to attention to what pensions departments offer or plans they offer. It's helpful to know how each works and get advice/tips from people who are already in the field!

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  • southpaw26
    replied
    ^^^Exactly what he said! Hey ChiTownDet or anyone, is it better to go through PDs 401k, 457b plans or just start your own savings? Is it like those risky market deals or secured money they match? I apologize for getting ahead of myself but I guess it's never too early to start thinking about that stuff.

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