Over the course of the summer and fall of 2013, a bipartisan Conference Committee worked to draft a reform proposal that could be passed by the General Assembly. Based on the work of the Conference Committee, it appears that a comprehensive pension proposal may be close.
While the details and financial impact of the pension reforms have not been finalized, the proposal is expected to include a reduction in cost-of-living increases for current and future retirees. Such increases are the biggest single driver of the cost of the state’s pension plans. In addition, the proposal is expected to include increases in retirement age for current workers as well as limits on pensionable salaries.
In return for these adjustments to benefits, current employees are expected to receive a reduction in their required annual contributions to the pension plans. In addition, a revised funding schedule and statutory funding guarantee are intended to ensure that the state adequately funds the pension plans in future years.
Taken together, these benefit and funding reforms are expected to save upwards of $150 Billion in state contributions to the pension plans over the next 30 years, with both taxpayers and pension beneficiaries sharing the required sacrifices. If the final pension proposal includes the reforms and generates the savings that have been projected, it will go a long way toward putting the State of Illinois back on the path to fiscal stability.