CHICAGO - Following the Illinois Supreme Court ruling that government retiree health insurance benefits are protected by the Illinois Constitution, the idea of putting state workers into 401(k) type plans is re-emerging as a possible option -- one that might pass court review, and be a real step toward solving the financial problem.
The State of Illionis currently has a $56 billion unfunded retiree health insurance deficit, and local governments are facing an $11 billion hole.
Klingner | Policy Analyst
John Klingner of the Illinois Policy Institute believe the court ruling may, in fact, present an opportunity to enact major reform. He argues that it is time for Illinois to follow the lead of other states and move new state workers onto 401(k)-style plans.
Klingner admits that while the creation of 401(k)-style plans for new workers won’t solve Illinois’ current financial problems, it will stop the bleeding and avoid conflict with the Illinois Constitution.
"It will also create retirement security for new state workers – they’ll own and control their own retirement accounts and won’t have to pay into into a system that may collapse and leave them with no money when they retire," writes Klingner.
"Moving to 401(k)-style plans for new state workers is a reform both parties can agree on. Putting retirements back into the hands of public employees is a responsible reform that can and should happen now," he says.