Saturday, May 28, 2011

SB 512

“This legislation seeks not only to increase the membership contribution one time, it seeks to put the membership contribution on an escalating scale that is recalculated every three years… It is important to stress that once a member has ceased participation in Tier One, he or she cannot rejoin that tier. If a member fails to make a selection, the member shall participate in Tier-Two. These periodic member choices every three years will result in increasing migration from the Tier-One Plan because of the rising cost. If a large amount of members migrate to the Tier-Three Plan, then contributions will not flow into [Tier-One and Tier-Two plans] and possibly endanger the solvency of these funds” (IFT).

Tier-One members must choose among the following if SB 512 is passed:

·         Remain in Tier-One with a contribution rate of 13.77 percent, an increase of 4.37 percent of salary

·         Select the Tier-Two option with a contribution rate of 6 percent, a retirement age of 67, a reduced COLA and a reduced final average salary (IEA); all service frozen as of June 30, 2012

·         Select the Tier-Three option, a Defined-Contribution Plan (401k), with a contribution rate of 6 percent; all service frozen as of June 30, 2012

Tier-Two membership must choose between the following if SB 512 is passed:

·         Remain in Tier Two with a new contribution rate of 6 percent, a retirement age of 67, a reduced COLA and a reduced final average salary

·         Select the Tier-Three option, a Defined-Contribution Plan (401k), with a contribution rate of 6 percent; all service frozen as of June 30, 2012

New hires will have to choose within six months of the date of employment between the following if SB 512 is passed:

·         Elect to participate in Tier Two with a contribution rate of 6 percent, a retirement age of 67, a reduced COLA and a reduced final average salary

·         Elect to participate in Tier Three option, a Defined-Contribution Plan (401k), with a contribution rate of 6 percent; all service frozen as of June 30, 2012

Sources: The Illinois Federation of Teachers (IFT) and the Illinois Education Association (IEA)

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