New Pension Reform Proposal Has Support From Both Sides of the Isle
House Republican Leader Tom Cross says the proposal could put billions of dollars back into the state's coffers. "If we would have been able to pass this bill a year ago and it had become law, we would have cut our pension plan down by two billion dollars. That is the significance of it. We have a 96-billion dollar unfunded liability. This bill would reduce that unfunded liability by almost $30-billion dollars," said Cross.
The proposal combines defined benefit and defined contribution plans for some workers. It also creates a new Tier for workers who start after January 1st, 2014 and are part of the university retirement system and the teacher's retirement systems. Those employees would pay four percent toward their pensions. Retirement age would go up for workers already in the systems. They'd also be required to pay two-percent more towards their pensions, and their cost of living adjustments would be delayed until their 67, or five years after they retire, whichever comes first.
The proposal is not finding support among the We Are One Illinois coalition backed by many of the State's largest public employee unions. They call the bill a step backwards and say like the previous approach it continues to focus on unfair, unconstitutional benefit cuts that erode the value of retirees' pension.
The group feels the hybrid 401k plan the proposal would create harms retirement security for a new generation, even though this feature does not substantially address the state's unfunded liability. They note employees like teachers, state university personnel, and police officers already do not receive Social Security, and more than half of their retirement would be at market risk under a hybrid proposal like HB 3411.
The coalition says the bill clearly defies the constitution and diminishes benefits unilaterally. If overturned, that means Illinois will be in a deeper hole, and the legislature will have kicked the can down the road again."
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