(Chicago, IL) – April 20, 2012. Governor Pat Quinn today announced an Illinois pension reform plan that he claims is expected to save taxpayers $65 to $85 billion.
“This plan rescues our pension system and allows public employees who have faithfully contributed to the system to continue to receive pension benefits,” said Quinn.
Illinois’ pension system is now under-funded by $83 billion. The fiscal year 2013 payment, $5.2 billion, now makes up 15% of general revenue fund spending compared to 6% a few years ago.
The Governor says his proposal provides for 100% funding for pension systems by 2042 and makes the following changes to the current Illinois pension plan:
- 3% increase in employee contributions
- Reduce COLA (cost of living adjustment) to lesser of 3% or ½ of CPI, simple interest
- Delay COLA to earlier of age 67 or 5 years after retirement
- Increase retirement age to 67 (to be phased in over several years)
- Establish 30-year closed ARC (actuarially required contribution) funding schedule
- Public sector pensions limited to public sector employment
In consideration for the changes above, employee pay increases will continue to be counted in the calculation of their pension and employees will receive a subsidy for their health care in retirement. Currently 90% of retired state employees pay nothing for their healthcare costs.
States comparable to Illinois in size and demographics provide little to no assistance for retiree healthcare costs, according to Quinn.
The Governor’s plan also calls for phasing-in the responsibility for paying normal costs of pensions to each employer, including school districts, community colleges and public universities.
Quinn says his plan reflects the discussions of the working group. Members of the pension working group include Sen. Mike Noland, Sen. Bill Brady, Rep. Elaine Nekritz, and Rep. Darlene Senger.