(May 2, 2013) -- A new plan to try and straighten out one of the worst-funded public pension systems in the US has been launched, potentially lining up a showdown with a bill on the matter already making its way through the political plumbing.
Senators in Illinois heard last night that a new plan to sort out its chronically underfunded public pensions had been launched by President John Cullerton, Reuters initially reported.
Cullerton said his plan would reduce the deficit the state faces but would not negatively impact the public sector employees relying on it for retirement benefits.
State Senator Linda Holmes, who was in the meeting, told Retuers the proposal may include elements of a measure she previously had introduced, including increased employee contributions and a requirement that the state make pension payments according to an actuarial formula.
The state is currently considering a plan tabled by Speaker of the House Mike Madigan, which entails capping salaries to prevent higher pension provision, limiting cost-of-living adjustments, increasing retirement ages, and contribution hikes.
Illinois sits alongside Kentucky as the state with the largest public pension shortfall. Estimates have claimed it is $96 billion in the red.
The state has recently settled a dispute with the Securities Exchange Commission in which the financial regulator said Illinois had misrepresented the extent of the pension black hole when marketing its bonds to investors. Ratings agency Moody's said in March that it would consider the health of a state's public pension system when deciding on grades.
Illinois Governor Pat Quinn made pension reform lawmakers' highest priority, but so far no real progress has been made.
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