New Pension Bill Introduced

A bill containing proposals previously announced by PBPA and the We Are One Illinois labor coalition has been introduced in the Illinois Senate.

Senate Bill 2404, was introduced Friday by State Sens. Linda Holmes (D-Aurora) and Pam Althoff (R-McHenry). SB 2404 contains proposals for helping the state resolve the pension mess that was caused by the diversion of pension money to other state programs, even as the participants in the state retirement systems were making their payments as scheduled.

The coalition member organizations support SB 2404 because it contains key elements the unions have repeatedly called for:

1) Funding guarantee
To ensure that future politicians do not repeat the mistakes of their predecessors, it is essential that proper funding for the pension systems is guaranteed in law. That means allowing those who have the most at stake, the members of these systems, to have the right to sue to compel the state to make its required annual contribution. Making these contributions a constitutionally protected provision ensures the legislature cannot underfund these systems by a simple majority vote when it is politically expedient.

2) Pension stabilization
Additional revenue is essential for any pension-funding plan to be successful. Creating a constitutionally protected pension stabilization fund is a sensible approach to paying down the state’s pension debt. Dedicating resources that have already been built into the base of the Illinois budget to directly pay down the unfunded liability, all while the state and the members continue to make the actuarially required contribution, is a common-sense and constitutional approach.

3) Shared sacrifice
Participants in the state pension systems have always paid their share of the pension cost, even when the state did not. While not to blame for Illinois’ pension shortfall, public employees are willing to share in the sacrifice and be part of the solution. With an ironclad funding guarantee to ensure employer underfunding can never happen again, Tier 1 employees will be prepared to contribute an additional 2 percent of salary, phased in over the next two years, for their retirement. This will generate more than $3 billion for the retirement systems over the next 10 years.

The coalition considers the introduction of SB 2404 to be the beginning of a discussion that the unions intend to see end with an agreement on a fair and constitutional bill that, when passed, will help Illinois get back on solid financial footing and ensure the participants on the state pension systems receive the pensions they have been promised.