Illinois Gov. Rauner Intends to Implement Own Pension Reform Plan Regardless of Court’s Ruling on Current Law


Illinois Gov. Bruce Rauner indicated this week that he’ll attempt to implement his own pension reform plan, regardless of how the court rules on the state’s 2013 overhaul.

Rauner said that SB-1, the state’s pension overhaul that is currently being challenged in court, doesn’t go far enough.

So, regardless of whether the law is upheld or overturned, Rauner said he plans on moving forward with his own version of pension reform. From Illinois Public Radio:

Republican Governor Bruce Rauner says he’ll push forward with his pension fix no matter how the seven justices rule on the 2013 legislation that was passed and signed into law before being put on hold by litigation.

The state’s highest court heard oral arguments last week on the package, which reduces benefits for both retirees and current workers. Projections are that it’ll save the state $137 billion over the next few decades.

Rauner says even if — and that’s a big if — the court upholds the law, more needs to be done.

“Even if the Supreme Court says the old pension change is fine,” the governor said, “it doesn’t fix enough of the problem.”

Rauner says he doesn’t like that the current law slices retirees’ benefits.

“Our plan saves far more money and is more reasonable,” the governor said, “and, frankly, if we did both, that’d be even better for taxpayers. But I believe ours is more reasonable, more fair.”

Rauner’s plan would not affect current retirees. But it would mean big changes for current workers and new hires.

The plan would, among other things, give workers the choice of receiving smaller pension benefits or transferring into a 401(k) plan.

A refresher on the rest of the details of Rauner’s reform plan, from Illinois Policy:

Employees who choose [the 401(k)] option will receive a lump-sum payment to be used as a starting balance for a defined-contribution plan in exchange for a voluntary reduction in their cost-of-living adjustments.


* Retirement age: Benefits earned before July 1, 2015, could be obtained at the retirement ages now in law, but payment of newly earned benefits could not commence until age 67.

* High-salaried pensions: A cap on the final average salary used to calculate benefits will be placed on newly earned benefits for high-salaried pensions. This cap increases annually.

* Salary spiking: To prevent late-career teacher salary spikes that drive up decades of benefits, the end-of-career salary cap will be changed from the current 6 percent per year to the prior year’s increase in the consumer price index. Any pension costs caused by salary increases above inflation will be paid by the local employer.

* Overtime pay: Going forward, overtime pay will not be counted in an employee’s final average salary. This reform also prevents expensive lifelong benefits triggered by short-term salary spiking.

Read the bullet points of Rauner’s budget proposal here.


Photo by Tricia Scully via Flickr CC License

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