Illinois’ pension system has spiraled so out of control that not even the architects of the system can fix it

Illinois Policy Institute

Like many, we are disappointed that pension reform was not enacted during the spring legislative session. But make no mistake: the Madigan and Cullerton pension proposals were not pension reform. Taxpayers should be relieved they did not pass.

Right now, the job of Illinois government is to provide for the well-being of all the people. While the Madigan and Cullerton pension plans were very different in their approaches, they had one common and fatal flaw: both contained a “funding guarantee.”

Under this guarantee, the first priority of Illinois government would no longer be the well-being of all people, but instead to fund pensions for government workers. This fundamental transition in the role of government would have been a grave mistake for Illinois.

Illinois cannot and should not be a place where one class of people — government workers — is placed on a pedestal above everyone else. At the same time, government workers need and deserve a secure retirement. Many teachers, public safety officers and state workers in Illinois are wondering whether there will be any money left in the pension funds when it’s time for them to retire. They cannot afford to wait for the politicians who got Illinois into this mess to finally get Illinois out of this mess. It’s time to get politicians out of the retirement business, and turn over control to workers.

Only one pension plan does this, and that is House Bill 3303. This pension bill was crafted by our team, and is supported by state Reps. Tom Morrison and Jeanne Ives, and state Sen. Jim Oberweis. This bill would freeze the pension systems, protecting the benefits earned to date, and move all future benefits to a 401(k)-style system used by 85% of the private sector.

The core components of the Institute’s 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 on the table. It would:

  • immediately reduce the unfunded liability by about half, or $46 billion, which is more than twice what the Madigan proposal reportedly would save;
  • save the state more than $220 billion between now and 2045, compared to the less than $190 billion by the Madigan plan;
  • replace the irresponsible repayment ramp with level payments;
  • reduce the state’s annual pension contribution by more than $2 billion in fiscal year 2014 and eliminate the state’s unfunded liability by 2045; and
  • empower workers to control their retirement savings going forward with 401(k)-style plans modeled after the existing State Universities Retirement System’s 401(a) plan.

The bottom line is this: The General Assembly’s inability to enact real pension reform proves why politicians must get out of the retirement business. 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 workers’ retirements back where it belongs

This entry was posted in Illinois pensions. Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s