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Benefits May 27, 2011
IL House Panel Approves Choice in Public Sector Pensions
May 27, 2011 (PLANSPONSOR.com) - The Illinois House Personnel and Pensions Committee approved legislation that would give existing teachers and state employees a choice of three retirement plans in which to enroll — one that preserves existing pension benefits, another with reduced pension benefits, and a third that would amount to a 401(k)-style retirement plan.
Reported by Rebecca Moore
According to the Chicago Sun-Times, the highest-priced plan would enable existing state workers, teachers, judges and lawmakers to preserve their current post-retirement annuities that top out at between 75% and 85% of their final salaries. However it would require higher employee contributions, and those contributions could increase every three years.
The news report said a state worker now having 4% of his or her paycheck withheld as a pension contribution would see that amount increase to 9.29% under the legislation, and university workers would see an increase from 8% to more than 15%. In addition, for judges, their existing 11% withholding for pension would jump to a more than 34% pension contribution from their paychecks, and lawmakers would go from 11.5% to nearly 25% under the plan.
The plan also contains language that would require greater pension contributions from Chicago municipal workers, Chicago teachers and Cook County employees. For those workers, existing employee pension withholding of between 8.5% and 9% from each paycheck would jump to as high as 14.47%.
The Sun-Times reports that opponents of the legislation include the Illinois AFL-CIO, Illinois Education Association, Illinois Federation of Teachers and AFSCME Council 31, which argued that changing the terms of pensions for existing government workers violates a provision in the state’s 1970 Constitution barring the diminishment of public-employee pensions.