A group of Republican lawmakers is promoting a way of dealing with under-funded public pensions in Illinois. They’re proposing a change from the current so-called defined benefit system to a 401(k)-type program that many private-sector workers have. State Rep. Tom Morrison (R-Palatine) has introduced H.B. 3303, saying it’s the only way to fix the whole problem.
“This is what real pension reform looks like. If they’re serious about fixing Illinois’ pension problem in a fair way and for the long haul, the ideas in H.B. 3303 should be our starting point when we gather in Springfield on Wednesday,” he said.
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Other lawmakers on board are State Reps. Jeanne Ives (R-Wheaton) and Ron Sandack (R-Downers Grove) and State Sens. Jim Oberweis (R-Sugar Grove) and Michael Connelly (R-Lisle).
The plan would give state workers, state university and community college workers and teachers a pension for their current service time, but then convert them into a defined contribution program from now on, with a 7 percent employer match if they contribute 8 percent of their salaries.
The plan, hatched by the Illinois Policy Institute, reduces retirement costs for taxpayers from $6.7 billion next fiscal year to approximately $6 billion, and then keeps the number there until 2045, whereas the cost to taxpayers under current law is projected to rise to more than $15 billion by then.
However, if returns on investment are poor, this could give the beneficiaries a lower retirement income. Also, they would be enrolled in neither a government pension nor Social Security, so they would have to manage risk on their own.
Morrison pointed out that of the plans now under consideration in Springfield, even the more aggressive one would not solve the problem of the state’s unfunded pension liability, but would only knock it back $20 billion or so.