Updated Wednesday, July 23, 2014 as of 10:20 PM ET
Practice - Retirement Planning
Threats in Illinois, Detroit Rattle Government Workers
by: Mark Niquette and William Selway
Thursday, December 5, 2013
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(Bloomberg) -- Bev Johns sat before Illinois lawmakers and asked why they hated teachers.

The 67-year-old retired special-education teacher and administrator from Jacksonville thought she had a secure pension in return for 34 years of work. She wanted the people considering reducing benefits to rescue the worst-funded U.S. state pension system to know whom they were affecting.

“You are punishing people who devoted their lives to educating children,” Johns told a committee in Springfield on Dec. 3. “You are harming individuals who have educated children, worked long hours, paid for materials out of their pocket and often fed and clothed children.”

The legislature’s vote that day to approve the $160 billion restructuring, on the same day that a federal judge ruled that bankrupt Detroit may cut retirement benefits, shows the erosion of a social compact. For generations, public employees accepted modest wages for the promise of a secure retirement. The decisions, coming after efforts to curb public-employee power in states such as Wisconsin, Indiana and Michigan, may embolden other municipalities, leave workers more vulnerable and prompt unions to new tactics of opposition.

Retirees are already seeing reduced benefits in cities such as Central Falls, Rhode Island, where a judge last year approved cutting pensions to help it emerge from insolvency. In California, San Jose Mayor Chuck Reed is leading the push for an initiative that would let cities cut benefits already promised to employees.

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