You may have heard there was a tentative deal reached on a pension fix in Illinois. Now that highly uncertain proposal, much needed to provide relief, will be heading to the courts.
Lawmakers recently approved a measure that would eliminate the $100 billion unfunded pension liability by cutting benefits for workers and retirees. Public-employee unions have promised legal action if Gov. Pat Quinn signs the bill, which the Chicago Democrat said he will do “promptly.”
According to ABC News, unions argue that the legislation violates a provision of the state constitution that says pension benefits may not be diminished. They criticized lawmakers who voted to approve a bill they say is clearly unconstitutional.
“A majority of legislators ignored and defied their oaths of office today — but Governor Pat Quinn doesn’t have to. He can stay true to his oath and the legal promise made to public employees and retirees by vetoing this unfair, unconstitutional bill,” a coalition of unions known as We Are One Illinois said in an emailed statement. “If he doesn’t, our union coalition will have no choice but to seek to uphold the Illinois Constitution and protect workers’ life savings through legal action.”
Illinois seems to be stuck between a rock and a hard place. The Bill looks would save the state $160 billion over 30 years and fully fund the system by 2044. However, it would also push back the retirement age for workers ages 45 and younger, on a sliding scale.
The annual 3% cost-of-living increases for current retirees would be replaced with a system that only provides the increases on a portion of benefits, based on how many years a beneficiary was in a job. Some workers will have the option of freezing their pension and starting a 401(k)-style defined contribution plan.
“I don’t take any joy in this action today,” said Rep. Elaine Nekritz, a Democrat from the Chicago suburb of Northbrook who is the chairwoman of the House pension committee. “Yet it’s the responsible thing to provide a pension system that gives workers retirement security without bankrupting our state.”
The overall fate of the proposal is still cloudy at best, but it is indeed heading to the courts. What are your thoughts on the proposed “pension fix” in Illinois?