SPRINGFIELD, IL (KFVS) - Illinois Gov. Pat Quinn announced a plan on Friday that he says will fix the state's public workers' pensions created by decades of mismanagement.
He says the proposal is expected to save taxpayers $65-85 billion based on current calculated guesses.
The Governor says the proposal follows weeks of discussion by his pension working group.
"Unsustainable pension costs are squeezing core programs in education, public safety and human services, in addition to limiting our ability to pay our bills," Governor Quinn said. "This plan rescues our pension system and allows public employees who have faithfully contributed to the system to continue to receive pension benefits. I urge the General Assembly to move forward with this plan, which will bring a new era of fiscal responsibility and stability to Illinois."
Quinn says his proposal provides for 100% funding for pension systems by 2042 and makes the following changes to the current plan:
-3% increase in employee contributions
-Reduce COLA (cost of living adjustment) to lesser of 3% or ½ of CPI, simple interest
- Delay COLA to earlier of age 67 or 5 years after retirement
-Increase retirement age to 67 (to be phased in over several years)
-Establish 30-year closed ARC (actuarially required contribution) funding schedule
- Public sector pensions limited to public sector employment
The governor says that employee pay increases will continue to be counted in the calculation of their pension and employees will receive a subsidy for their health care in retirement.
He says the state can no longer provide current levels of both pensions and retiree healthcare to employees upon retirement.
According to Quinn, 90% of retired state employees pay nothing for their healthcare costs. States comparable to Illinois in size and demographics provide little to no assistance for retiree healthcare costs.
The Governor says his plan also calls for phasing-in the responsibility for paying normal costs of pensions to each employer, including school districts, community colleges and public universities.