Illinois lawmakers from both sides of the aisle came together to pass the biggest overhaul of the state’s pension system in recent memory.
A plan projected to save taxpayers $160 billion over the next 30 years.
Naperville’s representative, Darlene Senger, was appointed by the Governor to a bi-partisan committee less than a year ago, to find a solution to Illinois’ $100 billion pension problem.
Leaders of both parties crafted the deal, which will take effect June 1.
The new law will: decrease employee contributions by 1%, require the state funded contributions, give some workers the option to switch to a “defined-contribution” system, similar to a 401k plan, reduce annual cost of living adjustments (COLAs), increase the retirement age for workers under the age of 45, and impose a pension cap.
For example: the pension of a retired teacher with 30 years of service whose initial benefit is $67,000 annually, would grow into about $120,000 with a COLA over 20 years under the contracted plan. Now, that pension will only reach $91,000 over those 20 years, a decrease of over $280,000.
“It’s unfortunate that we had to get to the day that we had to break those contracts,” explained Senger. “But we are at a point now where you are going to get your pension, you are going to get that payment.”
However, not everyone was behind the plan. The reform passed by nine votes in the House and only six in the Senate.
“This is no different than a thief in the night coming in and taking your valuables,” said Illinois Senator Linda Holmes (D), during her speech to her fellow senators urging them to vote no. “The difference is that this isn’t a thief in the night. It’s your elected representatives coming to you, looking you straight in the eye and saying ‘I’m going to take away your future.’ That is more than a promise broken, that is reprehensible.”
“This bill ensures that the state will have to borrow or tax in the future to keep up with pensions and then cross our fingers and wish upon a star for solid investments just to keep up with inflation to keep up with pension funding,” said Representative Jeanne Ives, (R) who also voted no.
The passing of this bill doesn’t mean Illinois’ pension problems are over. Many unions representing police officers, caregivers, and teachers said they will challenge the legislation in court because they feel the reform violates the Illinois constitution.
“When it goes to court, it will be in the hands of seven individuals who will decide if it’s something we can do or not,” said Senger.
Lawmakers say their next task is to reform the tier two pension program.
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