What Rauner’s Pension Proposal Would Mean For State Workers

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Support for Illinois Gov. Rauner’s pension overhaul proposal, unveiled last week, is split down party lines, and the divide only deepened as the plan’s full details were released.

The law would limit union workers’ ability to collectively bargain on many issues; additionally, Rauner offers incentives to workers who opt-in to a less generous pension plan.

More from the Associated Press:

The legislation would prohibit state employee unions from collective bargaining on issues such as wages, vacation and overtime, and would freeze salaries for five years beginning this month. It would then offer workers the option of getting raises, more vacation or more overtime — but only if they agree to switch to a less-generous pension plan.

[…]

The legislation would provide state employees with incentives to switch to the pension plan the Legislature adopted for workers hired in 2011 or later.

The so-called “Tier II” pension plan requires employees to work longer before they may retire. It also provides smaller cost-of-living increases in retirement than the plan most workers are on, which provides 3 percent increases each year, compounded annually.

Workers who switch to the less-generous pension plan may choose from three incentive packages. They offer various increases in salary, vacation or overtime earnings, plus a $2000 “transition bonus.”

[…]

New police officers and firefighters would be put into a so-called “Tier 3″ plan, which would be a hybrid of a pension plan and a 401(k)-style defined contribution plan.

Additionally, the overhaul gives Chicago a longer timeline for bringing its police and fire pension funding up to 90 percent. Right now, the city has until 2040 to bring its public safety pensions to a 90 percent funded ratio; under Rauner’s plan, the deadline would be extended to 2055.

 

Photo by Tricia Scully via Flickr CC License

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