Illinois lawmakers in both the House and Senate began debate Tuesday about a proposed plan to remedy the state’s $100 billion pension problem. Political leaders from both parties have signed off on the plan. So has Gov. Pat Quinn.
However, the state’s employee unions already are threatening to sue, saying the deal will cost them benefits. Such a decrease is prohibited by the state’s constitution.
The proposal, which is designed to save $160 billion during the next 30 years, will cost state workers money, but they might want to think twice about backing the General Assembly into a place where its members decide to put constitutional amendments in front of Illinois voters.
Blame for the pension’s unfunded liability lies with the General Assembly. Lawmakers failed to put aside money to pay pension benefits, benefits they agreed to provide.
The plan under discussion, according to The Associated Press, would raise the retirement age from 45 or younger on a sliding scale over a few years; change the cost of living increase from its 3 percant a year compounded annually on the full annuity benefit to a lower amount; and cap the amount of a worker’s salary on which the pension benefit is based.
In return, workers would pay 1 percent less and they would gain the option of participating in a 401(k)-type of plan.
Also, the plan guarantees the state will pay its share every year.
Many workers in the private sector labor without any pension plan. They might participate in a 401(k) plan, but many companies stopped making contributions to such plans on employees’ behalf. So the deal waiting for state employees under the proposed plan, even though it is less than the original agreement, looks pretty good to most non-state workers. And that’s where the risk of forcing a possible constitution amendment onto the ballot comes in.