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Dear Neighbors:

Thank you for visiting my website. As Illinois State Senator for the 6th District, I am happy to provide my constituents and friends with this resourceful guide to Illinois and the district.

This website is designed to provide you with updates on the legislative actions in Springfield as well as local events in our community. If you have questions, comments, or suggestions regarding state government, please feel free to contact me. I welcome your feedback and look forward to hearing from you.


John J. Cullerton
Illinois Senate President

2010 Pension Reform: Stabilizing Illinois’ Retirement Systems

Background of the Crisis:

In February 2010, the nationally recognized non-partisan Pew Center on the States reported that Illinois’ pension systems are, “in the worst shape of any state with a funding level of 54 percent and an unfunded liability of more than $54 billion.”  This report was another reminder of how insecure our retirement systems have become.


How did this happen?  This crisis is a direct result of not paying the bills on time. Decades ago, Republican Governors proposed spending plans that simply didn’t contribute the employer portion to the retirement systems.  Year after year legislators – Democrats and Republicans alike – approved these budgets.  In the most simplistic terms, government put off paying the bills and this crisis is what we have to show for it.


Public professionals and retirees are not to blame for the massive unfunded liability of our pension systems.  Never once have public employees neglected to make their contribution to secure a dignified retirement. 


Benefits are also not to blame.  When compared to other states, the retirement benefits awarded to public employees are well within the norm.  And the normal costs to the State are less than that of private employers. 


Past “Reforms” Didn’t Anticipate Economic Crises.  In the 1990s, the General Assembly mandated that pension funds must be 90% funded by 2045.  This required extra funds, increasing every year, to achieve this goal.  For FY2011, this plan means that Illinois will commit and estimated $4 billion to retirement systems.  This includes a payment of $2.5 billion to devote money that past Governors and legislatures had not. 


Reform Needed:

The legislature’s overdue choice this year was to make the difficult decisions aimed at restoring the long-term fiscal health of our retirement systems.  The challenge facing Illinois is a balancing act that necessitates a long-term stabilization plan for retirement systems and state budgets for years to come. 


Pension reform must ensure that existing employees and retirees can have confidence that their retirement benefits are safe.  At the same time, the state of Illinois must find ways to save hundreds of billions of dollars in costs – funds that will be used to help employ teachers and public professionals.


SB 1946: Substantial Reform:

This year, Senate President John Cullerton worked to pass the most comprehensive pension reform in Illinois history since the inception of the state’s retirement systems. This legislation makes substantial reforms to 13 of the State’s pension systems, but it will not affect current employees.


Highlights Regarding 2010 Pension Stabilization Plan:

The reforms do not apply to current employees or retirees.  They apply only to those who are employed on or after January 1, 2011.


To earn a full pension, retirement is adjusted to age 67 with 10 years of service.  A reduced annuity is available at age 62 with 10 years of service.


Final average salary is calculated over an eight-year period (rather than the 4-year period allowed for existing employees).


The Cost of Living Adjustment is reduced from a 3% annual compounded adjustment to an adjustment based on the Consumer Price Index increase up to 3%.  This adjustment is not-compounded, meaning that each increase is based only the original pensionable salary.


Pensionable income is limited to $106,800, mirroring the maximum amount which taxes for Social Security are applied.  For example, even though school administrator may earn a salary of $200,000, she may only earn a pension based on $106,800.  This amount is indexed and will increase reflective of  the consumer price index.


Substantial changes are enacted for legislators and judges.  Most significant is the adjustment that permits these retirees to earn an annuity at 60% of the final average salary.  This is significant reduction from the current benefit of 85% of final average salary.


The Alternative Formula will be limited to police officers, firefighters, and Department of Corrections security guards.  The retirement age for Alternative Formula members is adjusted to 60 years of age with 20 years of service.


Other Provisions:

Survivor annuities are set at 66 2/3% of the annuitant’s level.


Return to work provisions are strengthened by suspending the annuity of any retiree hired after the effective date who returns to full-time employment in a position covered under any public pension system.  This ends the practice labeled as “double dipping.”     


These changes affect the following retirement systems:

State Employees Retirement System

Illinois Municipal Retirement Fund

Teachers Retirement System

State Universities Retirement System

General Assembly Retirement System

                Judges Retirement System

Chicago Teachers Pension Fund

                Metropolitan Water Reclamation District

                Cook County Employees

                Chicago Municipal Employees

                Cook County Forest Preserve

                Chicago Park District

                Chicago Laborers