Call To Action: Repeal Tier 2

 

Hello Pension Warriors,

I don’t see any CTU leadership election Forum on the CTU calendar or the Lobby Days. Here are the questions you might want to use for the CTU leadership at HOD on April 30, 2025.

Misleading statements often used by those opposed to our pension include, “CTPF administers benefits, but only the state legislature has the power to change Tier 2 law.”

The trustees of the Chicago Teachers' Pension Fund (CTPF), as fiduciaries, play a crucial role in governing the fund. CTPF has a Pension Law and Administrative Rules Committee that initiates legislative changes affecting fund benefits and operations. This fiduciary duty requires them to act with the highest standards of ethics and morality to preserve the fund’s fiscal integrity and financial stability.

Given this, why hasn’t the Chicago Teachers Union (CTU) leadership collaborated with our trustees to exercise their fiduciary power and initiate legislative changes to repeal Tier 2?

Previously, the CTU Tier 2 committee supported legislation such as HB4098, which included provisions that further reduced the funding ratio. The courts have already established that our pensions must not be diminished or impaired.

Can the CTU committee come up with a resolution to repeal tier 2?

When will CTU start educating its members about a defined benefit plan and how to restore it?

Why wasn’t there language to repeal the Tier 2 Pension in the TA?

When will we have a full 12-member board of trustees? We currently have only 10 members; the two missing appointments are from CPS.

 I recognize that for any new law to be successful, it must be workable, fair, and clear. Unfortunately, this was not the case when the leaders of that time chose to divert our deferred wages, specifically from our defined benefits pension plan, for their purposes. While this decision is widely known, it is also deeply deceptive. Who can truly label diverting retirement savings as a “holiday”? Would legislators and all stakeholders consent to the beginning of the dismantling of our pension statute if they had accurate and reliable information? Would this legislation have passed if those behind the scheme had to rely on the approval of the people whose retirement savings they intended to use to finance their political projects?

We need to stop focusing solely on costs and begin by repealing Tier 2, fully restoring the original statute, and rebuilding the pension from the inside out. This issue transcends mere numbers; misleading terminology has confused many. Our lawmakers, along with everyone who supported that law, recognize that it did not comply with the fundamental safe harbor rule. Furthermore, they understand the negative impact it has had on recruiting and retaining educators, as well as the overall sustainability of great public education.

I’m also including Julie's overview and the article.

https://docs.google.com/document/d/1ZQ7FFoEvoOd4cW1Fo8lKiRwh_2XnRpyVzDd7yz4t4pE/edit?tab=t.0

https://blockclubchicago.org/2025/04/08/illinois-teachers-unions-are-pushing-changes-to-the-states-pension-system-this-spring/

      2. The Tier 2 Fact Sheet

     3. A form letter and Governor Pritzker’s voice on an opinion site. 

 https://gov.illinois.gov/contact-us/voice-an-opinion.htmlfbclid=IwY2xjawJz1B5leHRuA2FlbQIxMABicmlkETFmY0NNQkNBMWlqZlhvT3Z0AR6d9e1jTThg_2QXXNKpJitcSt4IpbjuuwnwKi-yaSmbWOJ0xKROtorSU8DO5Q_aem_9rGaaJ8dEd0eWLCUtPSz7Q

I hope this information proves helpful. Please express our gratitude to the governor for his efforts in protecting defined benefit plans. 

Thank you,

Tina Padilla

The CTPF April 15, 2025 Investment Meeting Preview

 

 To listen, click  Audio 

Hello Tina Padilla, here, bringing you The April 15, 2025 Investment Meeting Preview

#5 on the agenda is the 4^th quarter of 2024 fund performance report.

1. Fund Value: The Fund was worth $12.7 billion at the end of the fourth quarter, which is $406.8 million less than it was at the end of September 2024.
2. Reasons for Change: The decrease in value was due to:
• Investment losses: The Fund lost $131.9 million from its investments.
• Cash outflows: $274.9 million was taken out of the Fund.
3. Asset Allocation: The Fund's investments were mostly within the allowed ranges, except for international stocks and bonds.
4. Market Performance: During the fourth quarter:
• U.S. markets went up.
• International markets went down.
5. Fund Performance:
• The Fund had a return of -1.02% before fees and -1.13% after fees.
• It did better than its Policy Target by 107 basis points (1.07%).
• It ranked in the 46th percentile compared to similar funds.
6. Long-Term Performance: Over five, seven, and ten years, the Fund has performed better than its Policy Target and is above the median of its peer group.

 

#6 of the agenda, Due diligence presentation from Newport Partners.  The reason that they are coming in for due is because our Consultants and fund investment staff are recommending that we continue to invest with this manager. #7 Recommendations to re-up with Newport Partners.

Commit $25 million to Newport Capital Fund IV in addition to $3 million as Special GP

Continuation of Newport Capital Fund III and Newport Capital Fund II strategies, which have performed well for CTPF– Performance as of September 30, 2024:

Fund II Net IRR 6.9% Net Equity Multiple 1.53x

Fund III Net IRR 9.4% Net Equity Multiple 1.10x (still in investment period)

 Adds vintage year diversification

Provides diversified exposure to necessity and grocery-anchored retail which is a segment of the real estate market that has performed well relative to other property types.

 Participating as a Special GP provides a fee benefit to CTPF as Special GP’s receive GP carried interest, but do not pay investment management fees on the GP commitment.  Assuming that Newport achieves a 15% gross IRR for the Fund over its life, the net return to CTPF would be 14.7% including Special GP carried interest and fee savings as opposed to 12.8% if CTPF did not participate as a Special GP.

After the investment meeting, there is a First Look meeting where trustees, staff, and consultants review presentations from minority managers. Hope this was helpful. Get involved and defend the Gold Standard, the Defined Benefit Retirement our Chicago Teachers’ Pension Fund.

Know what the Gold Standard of retirement savings is called, and don't be scamed again.

 

Dear Friends of The Defined Benefit Plan,

Misinformation like what I read today motivates my actions.

https://www.investopedia.com/this-florida-town-is-top-ranked-for-retirees-11693868?hid=7384e07948e16fedfa221ddb8a97ac3942a4787b&did=17124830-20250401&utm_campaign=investopedia-daily_newsletter&utm_source=investopedia&utm_medium=email&utm_content=040125&lctg=7384e07948e16fedfa221ddb8a97ac3942a4787b&lr_input=fa63812332ddf0517412b8def7e4e5af2799024ba2d53a45005d8a9b896cbc9f&utm_term=midday

A Defined Benefit is, according to Investopedia:

https://www.investopedia.com/ask/answers/032415/how-does-defined-benefit-pension-plan-differ-defined-contribution-plan.asp

Let’s advocate for our right to the 130-year-old Defined Benefit Plan of the Chicago Teachers’ Pension Fund. I would appreciate it if you could share this with your readers. Tina Padilla (PAG oversight representative)