December 16, 2012

New Pension Plan Being Considered by General Assembly

State Representatives Elaine Nekritz and Daniel Biss.
SEVERAL STATE lawmakers have proposed a new pension plan, introduced as House Bill 6258.

THE BILL introduced by State Rep. Daniel Biss (D-Evanston) and State Rep. Elaine Nekritz (D-Northbrook), would:

Create a new 30-year pension payment plan, making the State pay its employer share with a new funding right that can be enforced through court action.
Allow cost-of-living pension increases only for the first $25,000 of an employee's pension.
Increase employees' retirement age from one to five years, depending on their current age.
Increase employees' pension contributions.
Place new hires in a cash balance plan that combines features of defined contribution (or 401(k)) plans and defined benefit plans.
Further limit legislators' pension increases.
Gradually shift teacher pension costs from the State to the school districts that determine salaries.
Further pay down pension debt with revenues freed ups when existing pension obligation notes are paid off.

BISS AND Nekritz are calling for action before the current Legislature's term ends on Wednesday, Jan. 9.

ANOTHER PLAN is Senate Bill 1673, proposed by House Speaker Michael Madigan. The plan offers two retirement options for employees who joined University before January 2011:

• A plan that includes State-sponsored retiree health care and lower annual cost of living increases than those now offered. The COLA would start at age 67 or five years after retirement, whichever occurs first; it would be the lesser of three percent or half the consumer price index, calculated on the original annuity.
• A plan that offers the same annual cost of living increases now available, 3 percent annual COLA on a compound interest basis, without participation in the state-sponsored retiree health care program.

THE PROPOSED legislation would not increase the pension contribution by employees or change the effective retirement age. However, it would essentially force employees to choose between health care benefits or the current COLA.

No comments:

Post a Comment