(Chicago, IL) — April 15, 2010. Governor Pat Quinn yesterday finally signed into law a significant public pension reform bill that will save taxpayers billions of dollars while protecting the retirement of state workers.
“From the moment I took office, I have worked to overhaul Illinois’ pension system to provide relief to taxpayers while protecting the savings of Illinois retirees,” said Quinn, who waited two weeks before signing the legislation.
“I congratulate House Speaker Michael Madigan and Senate President John Cullerton for their leadership on this crucial issue.”
The new law will save taxpayers more than $200 billion over nearly 35 years, stabilize current employee pensions and still provide new state workers a secure pension plan.
The legislation, Senate Bill 1946, was sponsored by Cullerton (D-Chicago) and Madigan (D-Chicago). The new law caps pensionable salary at $106,800 and raises the retirement age for full benefits to 67 with ten years of service. Employees will be eligible for reduced benefits at age 62.
Other bill sponsors included State Senators Christine Radogno, Michael Noland, Heather Steans, Mattie Hunter, Donne Trotter, State Representatives Kevin McCarthy and Barbara Flynn Currie.
The changes apply to new hires only and take effect on January 1, 2011.
The new law eliminates the 3 percent annually-compounded cost-of-living rate increase and replaces it with simple interest raises of half the consumer price index (CPI) or 3 percent, whichever is lower.
The legislation also forbids the practice of pension “double-dipping,” where someone receives a public pension while drawing a salary from a different public system.
The new law will have only a minor impact on Illinois’ budget this year, generating savings of approximately $400 million or $100 million more than Quinn originally predicted.
The legislature’s estimated savings for this year range from $500 million to $1 billion. Booking the higher estimated savings this year would reduce the scale of budget cuts pushed by Quinn, including the $1.3 billion reduction to education.
House and Senate budget staff are already cobbling a legislative version of the budget behind the scenes.