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Senate Committee Approves Pension Reform Plan
A comprehensive pension reform proposal is one step closer to becoming law in Illinois. A committee of lawmakers today approved changes to start cutting into the $97 billion in unfunded pension liability.
In an 11-4 vote, the Senate Executive Committee approved a plan that raises the retirement age and requires higher contributions from employees.
The proposal increases the amount employees contribute to their own retirement by 1 percent of their salary in the next budget year, and 2 percent starting next July. It limits the salary a pension can be based on to the social security wage base of $113,000. It also limits annual cost-of-living increases to $750, or 3 percent of the total annuity.
The plan also raises the retirement age for employees under 45 on a sliding scale from one to five years.
"Painful cuts have already been made to Medicaid, social services, and education to make room for pension payments, while the funding level has continued to deteriorate," Laurence Msall of the Civic Federation said. "This is clearly unsustainable."
The plan also shifts the costs of pensions for state university workers and teachers to the employer. It changes the state's contribution to the pensions systems to bring them to 100 percent funding by 2043. It also guarantees that funding, and gives a court the authority to compel the state to make its pension payment.
The same Senate committee is currently discussing a second proposal for pension reform. It includes many of the same ideas, but also provides an alternative if any of them are found to be unconstitutional.
Any proposal the Senate passes will have to win approval from the House. House Speaker Michael Madigan isn't saying which pension plan he supports, if any, but said it must include changes to cost-of-living increases.
Senate Committee Approves Pension Reform Plan
A comprehensive pension reform proposal is one step closer to becoming law in Illinois. A committee of lawmakers today approved changes to start cutting into the $97 billion in unfunded pension liability.
In an 11-4 vote, the Senate Executive Committee approved a plan that raises the retirement age and requires higher contributions from employees.
The proposal increases the amount employees contribute to their own retirement by 1 percent of their salary in the next budget year, and 2 percent starting next July. It limits the salary a pension can be based on to the social security wage base of $113,000. It also limits annual cost-of-living increases to $750, or 3 percent of the total annuity.
The plan also raises the retirement age for employees under 45 on a sliding scale from one to five years.
"Painful cuts have already been made to Medicaid, social services, and education to make room for pension payments, while the funding level has continued to deteriorate," Laurence Msall of the Civic Federation said. "This is clearly unsustainable."
The plan also shifts the costs of pensions for state university workers and teachers to the employer. It changes the state's contribution to the pensions systems to bring them to 100 percent funding by 2043. It also guarantees that funding, and gives a court the authority to compel the state to make its pension payment.
The same Senate committee is currently discussing a second proposal for pension reform. It includes many of the same ideas, but also provides an alternative if any of them are found to be unconstitutional.
Any proposal the Senate passes will have to win approval from the House. House Speaker Michael Madigan isn't saying which pension plan he supports, if any, but said it must include changes to cost-of-living increases.
