Today, Gov. Quinn announced a proposal to address the Illinois pension problem. The governor’s proposal applies to active employees enrolled in most state funded pension systems, including the Teachers’ Retirement System (TRS) and the State Universities Retirement System (SURS).
According to the governor, this proposal would only affect current employees; retirees would not be impacted.
The details are largely unknown, but we do know the proposal would:
- Require current active employees to pay an additional 3 percentage points of salary towards the funding of their pension. (TRS would go from 9.4% to 12.4% and SURS would go from 8% to 11%)
- Reduce the Cost of Living Adjustment in retirement (COLA) for Tier 1 employees (Participants before January 1, 2011) to a COLA that is not compounding and is the lesser of 3% or ½ of the Consumer Price Index. This is the same COLA that is applied to Tier 2 participants (Participants after January 1, 2011). It is believed that the proposal will require a delay of the COLA to either 5 years after retirement or age 67, whichever occurs earlier.
- Increase the retirement age to 67 for current employees (This may be phased in).
- The proposal requires that the state fully fund the retirement systems over 30 years and not over 33 years as required by current law.
The proposal the governor outlined would be posed to active members as a choice. Members could choose this benefit package, as previously outlined, and receive their health insurance premium subsidy. Or, members could keep the pension benefit structure they currently have but future salary increases would not count toward their pension and their health insurance premium subsidy would be dramatically reduced or possibly eliminated.
Again, the details are minimal and the implications of many of these ideas have not been fully fleshed out by the crafters.
IEA is opposed to any proposal that is in violation of the Illinois Constitution.