· A 3-percent increase in contributions for all current public employees;
· A reduced Cost-of-Living Adjustment (COLA) to lesser of 3 percent or ½ of the Consumer Price Index, whatever is less; the COLA will use a simple interest and not a compounded interest calculation;
· A delay of receiving a COLA until the age of 67 or five years after an earlier retirement;
· An increased retirement age to 67, phased in over several years;
· An establishment of a 30-year actuarially-required contribution funding schedule (according to the Governmental Accounting Standards Board).
According to Governor Quinn, “[the State of Illinois will] make sure that the public sector pensions go to [only] public sector employees… [This plan will] maintain the defined-benefit plan that exists today… Those who work for the state… and for local units of government, school districts, will have an opportunity to choose this new plan… Their pay raises will continue to be counted in the calculation of their pension benefits if they choose the plan that [Quinn has] outlined. They also will continue to receive a subsidy for their health care in retirement. If they choose not to accept the changes [that Quinn has] outlined…and continue in the current system… they will not have their future pay increases included in their pension calculation, and they will not have the subsidy that goes with respect to health care in retirement. The bottom line is that this saves between $65 – 85 billion for the people of Illinois through the period of time that we are talking about…”
Quinn is worried about a “double downgrade” in the state’s bond rating if the pensions’ unfunded liabilities are not addressed. His main concerns appear to be the business community and the Standard & Poor's rating agency, and not current public employees. Quinn believes that [his "bold"] plan is “constitutional” because the employee has an opportunity to choose either this proposed plan or to remain in his or her current defined-benefit plan. He said that the State of Illinois is “not under a constitutional obligation to offer subsidies for those who have retired in respect to their health care,” and he reiterated that the employee will give up health care if he or she does not choose the proposed plan as outlined.
According to Illinois AFL-CIO President Michael Carrigan, “Forcing public servants to choose between two sharply diminished pension plans is no choice at all. It is a clearly illegal attempt to solve the problem caused by past governors and the legislature solely on the backs of teachers, caregivers and other public workers.”