CHICAGO – As the General Assembly prepares to discuss the state's $100 billion prension crisis in this week's special session called by Gov. Pat Quinn, a group of lawmakers held a press conference today to present their pension reform plan they say would cut the pension liability by nearly half and protect the benefits earned to date by current government workers.
State Reps. Tom Morrison and Jeanne Ives, with State Sen. Jim Oberweis, have introduced House Bill 3303 and Senate Bill 2026, which they argue:
- Saves Illinois more than $221 billion over the next 30 years
- Is constitutional because it banks and protects the benefits that government workers have earned to date
- Ends the repayment ramp, and established a flat-rate payment schedule to retire Illinois’ pension debt and pay off benefits earned to date by current workers and retirees
- Going forward, current and future government workers would earn retirement benefits in a self-managed, 401(k)-style system. They would receive a generous 7 percent employer match every single paycheck after they contribute 8 percent (most workers currently contribute 9 percent)
- Does not affect current retirees, but protects and pays what they have earned.
Commenting on HB 3303, Representative Jeanne Ives stated, “This is the only pension bill that calls for real reform. Illinois must end its dependence on the defined benefit pension system and move to a 401(k)- style defined contribution system. Let’s start our talk on Wednesday with this bill as our base.”
Ives went on to say, “Good policy doesn’t have a party. It lifts people up, creates opportunity and increases the dominion people have over their own lives. As legislators, if we don’t take the right votes we are doing nothing to improve or grow economic prosperity for the tax-payers of Illinois. HB 3303 is the right plan for fixing Illinois’ pension crisis and setting us up for a brighter, more prosperous future.”
The plan was developed by the Illinois Policy Institute, a nonpartisan research and education organization. At its core, this plan calls for expanding a retirement plan that already exists today in Illinois for university and community college workers, and has more than 17,000 voluntary participants.
The core components of this plan have been scored by the Commission on Government Forecasting and Accountability, and have been found to achieve savings greater than any other pension proposal to date. It also follows the lead of other states that have implemented pension reform.
Starting in June 2006, Alaska shifted all new employees to defined contribution plans similar to the one proposed for Illinois. Michigan shifted all new state employees to 401(k)-style plans beginning in March 1997. And in 2011, Rhode Island passed a hybrid plan that allows workers to participate in a blended defined benefit and defined contribution plan. Nearly 85 percent of private sector workers are now enrolled in defined contribution plans.
In May, the legislative session ended without real pension reform being enacted. Illinois Policy Institute CEO John Tillman said Illinois should stop forcing government workers and teachers to participate in a pension plan so badly managed by politicians.
“The supposed gridlock between Illinois’ top political players and the General Assembly’s inability to enact real pension reform proves why politicians must get out of the retirement business,” said Tillman. “Politicians have created a system that has spiraled so out of control that not even the architects of the system can fix it. It’s time to put the power over worker’s retirements back where it belongs: in the hands of the workers.”