Pension Bill to be Signed Today
Governor Quinn is expected to sign a bill that would reduce pension benefits for new state employees. It's a start to scaling a big mountain.
Governor Pat Quinn is expected to sign Senate Bill 1946 into law today, effectively changing the pension benefits for only future public employees. The bills provisions (as summarized by the State Journal-Register):
- Raises the retirement age for full pension to 67 with 10 years of service. Raises the early retirement age to 62 with 10 years of service for reduced benefit.
- Limits the maximum pensionable salary to the 2010 Social Security wage base of $106,800.
- Final average salary would be the average of the highest eight consecutive salary years (instead of four) out of the previous 10 years.
- Cost of living adjustments would be calculated using simple interest rather than compound interest. COLA would be 3 percent or one-half of the inflation rate, whichever is less, and would apply only after age 67.
- Maximum General Assembly and judges’ pensions would be 60 percent of the calculated final average salary, down from 85 percent.
- Suspends the pension of any retiree who goes to work for a unit of government that participates in another pension system.
The fact that a Democratic legislature pushed through a pension reform bill and a Democratic governor is expected to sign it shows the level of public discontent with lavish public pensions. On a recent budget “teletownhall” held by the Illinois Policy Institute, 3 out of 4 questions from listeners had to do with right-sizing pensions. This may be the start of a national backlash against runaway public employee pensions.
Considering that Illinois has an $83 billion unfunded pension liability for benefits already earned, prospective benefit reforms for current employees will need to be buttressed by a pension funding mechanism that also tackles government spending. We’ll be updating our ground-breaking Pension Funding & Fairness Act to reflect these new changes. Stay tuned for more information.
As always, you can look up the individual pension payments for state retirees at IllinoisOpenGov.org.