Illinois House Republicans are on board with the governor’s idea of moving teachers and state workers to a 401(k)-type retirement system, at least philosophically. But House Minority Leader Jim Durkin (R-Western Springs) is not sure that the numbers work for the state, which will continue to have an obligation to workers who have earned pensions that depend on employee contributions.
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“I want to see exactly what the savings will be at the end of the day if we do something like this for current employees and retirees, because I do believe we still have obligations to people who are in the defined benefit program,” he said.
Three options are being discussed:
Putting new employees into 401(k) plans – a consequence of which would be that these employees would not be contributing to the pension plans from which some workers and retirees are still entitled to benefits.
Terminating pensions now, leaving current employees entitled to what they’ve earned but putting them in 401(k)s for work from now on. This is what the governor supports, based on his budget address. He believes it will produce $2.2 billion in savings that can be used to balance the 2016 budget.
Sticking with the current defined-benefit pension program, with various tweaks to keep a lid on costs, if the Supreme Court allows.
Durkin says he has not surveyed Republican House members to see if every one supports a switch to defined contribution plans, but he says Republicans as a group will not be an obstacle to such a change.