Illinois has finally, finally, made a real attempt at fixing its drastically underfunded pension system. From the Chicago Tribune, here’s what the plan does:
• Establishes a payment plan to fully erase pension shortfall by 2044.
• Allows a retirement system to sue to force state to make required pension payment.• Reduces public employee pension contribution by 1 percentage point.
• Limits future cost-of-living pension increases to 3 percent multiplied by the number of years worked times $1,000 — or $800 for those who also get Social Security. The $1,000 and $800 figures will be adjusted yearly by the rate of inflation. For example, a state employee who worked 30 years could see a $900 pension bump in year one of the plan.
• Skips some cost-of-living increases for current workers. Those 50 and older will miss one bump. Workers 43 and under will miss five bumps spread out over the years.
• Raises retirement age by up to five years for workers younger than 46.
• Creates a 401(k)-style defined contribution plan that a worker can opt into instead of continuing with the state pension plan.
• Prohibits future members of nongovernmental organizations from participating in state pension systems and bans new hires from using sick or vacation time toward their pensionable salary or years of service.
Predictably, unions are going to sue, based on an Illinois constitutional provision that prohibits reductions to pension benefits.