Illinois Lawmakers Consider Pension Buyout Proposals

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An Illinois House committee on Monday weighed two proposals that would allow state workers, at their time of retirement, to “buy out” of their pension and take a lump sum.

The sponsors of the proposals argue that they would pass constitutional muster because benefits aren’t reduced.

From the Pantagraph:

The House Personnel and Pensions Committee held its first hearing Monday on proposals from Republican state Reps. Mike Fortner of West Chicago and Mark Batinick of Plainfield. Both plans would allow workers to choose at retirement whether they want to take their money out of one of the state pension systems with the goal of giving the retiree more control over their money while helping to cut down the state’s $111 billion in unfunded pension liabilities.

[…]

At retirement, a worker would be able to take 75 percent of the “net present value” of his or her pension, not just amount he or she put in. Currently, the average value is about $700,000, Batinick said.

The retiree would then be out of the state pension plan, thus reducing the unfunded liability in the system.

Retirees would benefit from having more control over how their money is invested and taxed, and they would be able to will it to their families, which isn’t possible with pensions, Batinick said.

Representatives from the major state retirement systems attended the hearing, and, according to the Pantagraph, didn’t express outright opposition to the proposals.

 

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