BY REP. ELAINE NEKRITZ, ILLINOIS GENERAL ASSEMBLY
To state the obvious, Illinois has a pension problem. The solvency of the systems is clearly in jeopardy.
That fact alone doesn’t make it unique.
Dozens of states are facing the issue of
poorly funded pubic employee pensions.
investment returns are used to pay
benefits for those retirees and are not
building equity for anyone currently
working and paying into the system
for his or her future retirement.
remains that Illinois has a pension math
problem, and it must be addressed. Yet,
a consensus solution remains elusive.
Illinois stands apart, however, because
it has the most underfunded pension
systems in the country. Its five state
pension systems—the Teachers
Retirement System (TRS), the State
University Retirement System (SURS),
the State Employee Retirement System
(SERS), the Judges Retirement System
(JRS), and the General Assembly
Retirement System (GARS)—are about
40 percent funded. The goal is to be 100
percent funded, and anything over 80
percent funded is considered healthy.
That is a lot of ground to make up.
The unfunded liability currently stands
at nearly $95 billion. This underfunding
is due in part to the failure of the
state to make past payments into the
systems. But that is only half of the
story. According to the bipartisan
Illinois General Assembly Commission
on Government Forecasting and
Accountability, the other half of the
underfunding is due to the failure of
actuarial assumptions, investment losses,
benefit enhancements, and other factors.
Several pieces of legislation have been
introduced to address the situation.
Some impact retirement benefits,
while others rely on new revenues
to pay for ever-increasing pension
obligations. Some of the proposals
combine both approaches. Some
preserve the defined benefit nature
of the plans currently in place, while
the goal of others is to have current or
future employees move to a defined
contribution, or 401(k)-style, plan.
At a minimum, any solution to Illinois’
pension woes should achieve enough
savings to make the pension systems
sustainable for those who are relying
on them for their retirement years,
while also remaining affordable for
taxpayers who will be paying off the
unfunded liability for the next 30 years.
Retirement benefits that have been
promised are imperiled by underfunding.
Today, TRS has inadequate assets to
pay for the benefits of teachers who are
already retired. Therefore, all current
Participants in the systems are
correct when they say that they
paid into the system on time and
in full with every paycheck. They
did exactly what was asked of them
over the course of their careers.
However it got to this situation, the fact
Legislation should also seek to achieve
additional policy goals. It should seek