Tuesday, December 4, 2012

Bipartisan pension reform plan emerges in Illinois House (by Greg Hinz)

A bipartisan coalition of Illinois House members Wednesday is set to offer its own solution as to how to cure the state's pension woes. It appears their plan will be both promising and highly controversial.

In a news conference set for mid-morning, a group headed by Rep. Elaine Nekritz of Northbrook, the point-person for House Democrats on pension issues, will call for both a cutback in current benefits and guaranteed funding in the future for those benefits that have been promised.

Ms. Nekritz failed to return phone calls seeking comment. But sources said the plan will ask something of both the state and its workers, force suburbs to pick up the retirement costs of their pensions and risk a court challenge on constitutional grounds.

Specifically, cost-of-living hikes would be limited to the first $25,000-a-year of pensions and would not kick in until age 67 or five years after retirement. State officials say fast-rising COLAs have been the biggest factor in driving the state's unfunded pension liability to nearly $100 billion.

Also, the retirement age would go up one to five years (the higher figure would apply to younger workers), and employees would have to pay an additional 2 percent of salaries for their benefits. However, labor groups would get something they've been seeking for decades: a legally binding commitment, subject to court action, that the state will pay what it's supposed to pay each year into the state's retirement systems.

In addition, sources say, the cost of teacher pensions would be shifted to local school districts at the rate of 0.5 percent a year. That appears to be an effort to satisfy demands by Democrats that Downstate and suburban schools pick up local pension costs like Chicagoans already do.

What's not clear is whether workers and retirees would be given a choice in any of this. Senate Democrats have argued that choice is essential to satisfy a clause in the state constitution that may ban involuntary reductions in benefits once an employee is hired by the state.

According to a press advisory, among those scheduled to introduce the new plan are several other lakefront Democrats, including Chicagoans Greg Harris, Sara Feigenholtz and Ann Williams, as well as two Republicans: David Harris of Mt. Prospect and Chris Nybo of Northbrook…

from Crain’s:  
http://www.chicagobusiness.com/article/20121204/BLOGS02/121209930/bipartisan-pension-reform-plan-emerges-in-illinois-house

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