State Legislators Reach Deal to Increase Pension Funding
On November 27, 2013, leaders of the Illinois General Assembly reportedly struck a deal to address the state pension system’s nearly $100 billion of unfunded pension liability. Much of the savings would reportedly come from reductions in annual cost-of-living adjustments (COLA) to pensions. Instead of a flat 3% annual COLA for all pensioners as the current formula provides, the proposed change would provide a 3% COLA for each year of the employee’s service multiplied by $1,000 (e.g., a pensioner with 20 years of service would get a 3% COLA on the first $20,000 of her annual pension, even if the pensioner’s actual pension amount is higher than $20,000). In addition, further savings would come from increased minimum retirement ages for workers who are currently 45 and younger. Employees older than 45 would be unaffected by this change.
As always, please let us know if you have any questions on these items or any other recent developments.