Pension Reform

The Problem

Due to chronic underfunding since the 1970s and the recent stock market decline, the pension systems are currently 54.3 percent funded.

Over the last six months of 2008, stock market losses increased the unfunded liability from $54 billion to $73 billion.*

The unfunded liability is a constant stress on the state budget, requiring money that could be used to provide critical services such as health care, education, and public safety.

Additionally, the state has five public employee retirement systems with no uniformity. They have different benefits, employment contributions, retirement ages, and death and disability benefits.

The Solution: Modernization

State employees deserve a secure retirement after years of service.

This budget strengthens the state retirement systems and makes employee benefits more affordable, now and in the future.

Plan changes will apply to new employees only.

It will bring their benefits in line with changes in Social Security and other public pension systems.

These reforms will reduce Illinois taxpayers' liability by $162 billion in 2045.

Retirement Age

Adjust the retirement age for new employees, match Social Security requirements and other public pension systems.

Benefit Formula

Participants covered by Social Security would earn 1.5 percent of final pay per year of service. Those not covered by Social Security would earn 2 percent.

Cost of Living Adjustments

The COLA would be 50 percent of the consumer price index or three percent, whichever is lower, which is in line with other public retirement systems.

Employee Contributions

Current employees will increase their contribution by 2 percentage points - a reasonable amount for their future retirement.