Another Day, Another Cut Lifeline for Illinois’ Public Pensions

(August 27, 2013) — The senate might not be back in session, but Illinois’ legislators are already chewing over a new proposal to resolve its $145 billion pension problem.

On Friday, the Associated Press (AP) reported a new outline deal that had been proposed to tackle one of the worst-funded public pensions in the US. The proposal called for an end to the automatic 3% cost-of-living increases for retirees, and instead links the raises to inflation.

Under these new proposals, employees would contribute 1% less to their own retirement, but their benefits would be in line with a career-average salary base, rather than the current link to the final salary.

The bipartisan panel that came up with the plan had not finished its work and no reforms had been decided upon, the AP reported its chair Sen Kwame Raoul as stating.

However, unions were quick to voice their displeasure at the news. Last night, Progress Illinois, a political monitoring website, published a statement from the We Are One coalition of labor unions and their advocates.

It said: “Published reports suggest the legislative conference committee on pension reform is ready to rehash the same unfair, unconstitutional attacks on retirement security. Particularly harmful is the committee’s threat to delay and sharply reduce the cost-of-living adjustment that protects retirees from inflation. Research shows that a COLA cut to half the rate of inflation slashes the benefit earned by a retiree just as deeply as the drastic Senate Bill 1 that was twice rejected in the Senate.”

The coalition said the affected workers deserved better from the state.

“We urge conferees and all legislators to abandon unconstitutional cuts and focus on Senate Bill 2404, a compromise pension solution that maintains basic fairness, saves nearly $140 billion and has majority support in both the Senate and House.”

This latest move follows weeks of negotiation, which continued right up until time ran out in the state’s previous law-making session, when politicians of all colours clamoured to find a solution to the pension problem that continues to add financial burdens to the state’s economy.