TIER I Members (state employees in the current state pension system)
COLA (Cost of Living
Adjustments)
Cost of living adjustments would apply only
to the first $25,000 of someone’s pension if the retiree does not receive
Social Security, and $20,000 if the state pension is coordinated with Social
Security. The COLA adjustments wouldn’t take effect until a pensioner
reaches age 67 or five years after retirement, whichever comes first.
This would apply to current retirees.
Retirement Age
-Retirement age increases would not apply to
employees age 45 and older.-One year is added to the current retirement age for employees between 40-44 years old.
-Three years for employees (between 35-39);
-Five years for employees 34 and younger.
Employee Contributions Increase
Tier 1 employees (in the current state pension systems)
- 1% for first fiscal year the legislation is in effect (Fiscal Year 2014 at the earliest)
-2% each year thereafter
Pensionable Salary (the
amount of salary that counts toward a pension) is limited to the higher of the
Social Security wage base or the participant’s salary when the legislation
becomes law.
Tier 2 Members (employees
hired since 2011)
All new employees in the Teachers Retirement
System and State University Retirement System are placed in a cash balance plan:
Employees
are guaranteed a minimum defined benefit but employers have predictable costs
and are protected from investment risk- this combines the best features of
defined contribution (or 401k) plans and defined benefit plans.
Local
school districts can negotiate the generosity and cost of the benefit with
employees.
TRS
and SURS employees hired before the effective date can choose to remain in Tier
2 or join the cash plan.
Employer Contributions
-Schools and colleges/universities will
assume employer costs for benefits in the TRS and SURs systems now paid for by
the state, with that responsibility shifting to them at a rate of 0.5 percent
of payroll each year. According to TRS,
the total amount to be shifted is less than 1% of payroll.
-TRS and SURS employers will pay the specific
pension cost of any employee’s salary they increase, to prevent a school from
increasing a superintendent’s salary and then having other schools share in the
cost of paying that increase once they have the responsibility of paying the
pension costs for their employees.
-Employer contributions will be on a 30-year
level funding plan to achieve 100 percent funding.
-Employer contributions will be enforced
through court action or intercept of other state funds if payments are not made
as required under the new funding plan.
-Revenue now being used to pay pension
obligation debt will annually go to pay the broader pension deficit down once
the pension obligation bonds are paid off. This would mean $693.5 million
per year going to pay off pension debt starting in FY 2016, and $900 million
per year starting FY 2020.
State Contributions
-Contributions set on a 30-year funding plan
with 100% funding goal by 2043.
-Unions are allowed to take court action to
force state, school districts and universities to pay their required pension
contributions.
-Once Illinois pension bonds mature, revenue
that had been used for debt service payment would be used to pay off unfunded
pension liabilities.
-COLAs for General Assembly Retirement System
members will match those of Tier 2 members in the other pension systems.
Read
Read
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.