Pension Poison Bill

Lawmakers Pass State Pension Reform Legislation

by The Chicago Teachers Pension Fund

Illinois lawmakers in both the House and Senate passed pension reform legislation, Senate Bill 1, yesterday afternoon. The bill includes changes to four of the five state-wide pension systems: Teachers' Retirement System (TRS), State Employees Retirement System (SERS), State Universities Retirement System (SURS), and the General Assembly Retirement System (GARS). 

 

Chicago Teachers Pension Fund is NOT currently included in this legislation. 

More Information about Senate Bill 1

The legislation:

1.  Changes the calculation for Annual Annuity Adjustments
   (Cost of living increases -- COLAs). Future COLA increases would be 3 percent multiplied by the number of years worked times $1,000 ($800 for those coordinated with Social Security). The $1,000/$800 will be adjusted each year by the CPI for everyone (retirees and current employees). Those with an annuity that is less than their years of service times $1,000/$800 (or whatever the amount is at the time of retirement) will receive a COLA equal to 3% compounded each year until their annuity reaches that amount. 
2. Skips annual COLAs depending on age. Employees over 50 miss 1 adjustment; 49-47 miss 3 adjustments; 46-44 miss 4 adjustments; and 43 and under miss 5 adjustments. 
3. Increases the retirement age for those under age 45 on a graduated scale.
4. Caps pensionable salary at the current Tier II salary cap -- $109,971 (for 2013). Salaries that currently exceed the cap would be grandfathered in. The cap will adjust annually.
5. Decreases current employee pension contributions by 1%.
6. Prohibits the State pension systems from using pension funds to pay healthcare costs. 
7. Establishes a funding schedule which guarantees 100% funding no later than the end of FY2044.
8. Requires the state to make supplemental contributions: The State will contribute (i) $364 million in FY19, (ii) $1 billion annually thereafter through 2045 or until the system reaches 100% funding, and (iii) 10% of the annual savings resulting from pension reform beginning in FY16 until the system reaches 100% funding. 
9. Allows a retirement system to sue for required payments or supplemental contributions. 
10. Allows up to 5% of Tier 1 active members to join a defined contribution plan. 
11. Excludes "all pension matters" except pension pickups, from collective bargaining.

Click here to read the vote in the house

Click here to read the vote in the senate

Click here to link to the legislation (300+ pages)

CTPF's Role 

The Illinois legislature determines the laws and rules that govern our fund. The CTPF Board of Trustees administers the law and protects the Fund's finances to ensure retirement security for all members.