Bill preventing pension double dipping awaits Rauner’s signature
House Bill 418 would prevent retired police officers from double dipping in the Illinois Municipal Retirement Fund, which has placed a burden on taxpayers at the local level.
A bill that would curb abuse of one of Illinois’ many mismanaged pension funds cleared the Illinois General Assembly May 29 and awaits the governor’s signature.
House Bill 418, introduced by state Rep. Grant Wehrli and state Sen. Michael Connelly, both Naperville Republicans, would prevent retired police officers from double dipping in pension funds by electing to participate in the fund if they return to the force as a police chief or return to service with a different municipality. Retired cops who return in either of those capacities would enroll in a 401(k)-style plan instead of a second pension. The legislation would affect retirees as of Jan. 1, 2019.
The legislation stemmed from a 2012 dispute over whether a Naperville police chief should be eligible for police pension payments after returning to the department to take that position post-retirement. Naperville has to contribute nearly $20,000 in retirement costs this year to the Illinois Municipal Retirement Fund, or IMRF, on behalf of Police Chief Robert Marshall, on top of his $168,785 salary, according to the Daily Herald. This is in addition to the pension Marshall is receiving from his original service with the police department, meaning he is receiving pension payments on top of his salary, while accumulating a second pension.
This kind of double dipping piles on pension costs for taxpayers, and the way the IMRF is structured enables it.
Some tout IMRF as the model pension fund, as it boasts an 87 percent funding ratio. But the truth is IMRF just masks its weakness by shifting the financial pain onto municipalities each year. Cities are mandated – through a court-enforced funding guarantee – to fund IMRF pensions before everything else, even if that means cutting budgets for other necessary services. That funding guarantee puts taxpayers on the hook for every funding shortfall in the pension fund.
IMRF benefits are growing faster than city budgets and the rate of inflation. Employee contributions for a majority of workers are fixed at 4.5 percent a year, but benefits have grown at the pace of 7.2 percent a year since 2000 – meaning taxpayers have had to cover the increase, contributing far more than employees.
And since IMRF funding is guaranteed, cities are often forced to cut back on local services and raise taxes and fees to make the payments.
Politicians’ mishandling of the state’s broken defined benefit plans have put taxpayers on the hook for too much for too long. Ending defined benefit plans and moving more workers to 401(k)-style plans could save the state more than $1.6 billion per year. Measures like HB 418 are a necessary step in the right direction, rescuing taxpayers from a broken system.