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1.23.2012
The State Universities Annuitants Association will be supporting legislation to change the Illinois Pension Code that would guarantee the States' share of the pension costs for current and future State-funded Universities and Community Colleges' employees.
SUAA has drafted proposed legislation based on similar assurance language in 40 ILCS 5/7-172.1 that allows the Illinois Municipal Retirement Fund (IMRF) to enforce payments by municipalities for pension fund contributions. In exchange for this amendment, SUAA would endorse a modest increase in the pension contribution rate for all State funded Universities and Community Colleges' employees.
A June 2011 report from the National Institute for Retirement Security identified six retirement systems in the US that have weathered the current recession better than other public pension systems. One of those in that report was the IMRF.[1]
SUAA believes laws that enforced payments to IMRF is the primary reason it has a funding ratio far above other retirement systems and SUAA is working to pass similar enforcement mechanisms for our members.
Senate Bill 512 Amendment 002
November 8, 2011
John Carr, SUAA contract lawyer, has provided a short analysis of SB512 House Amendment 002. For those of you who are currently working this bill continues to be quite damaging. Please read the analysis below in its entirety.
The amendment is in House Personnel and Pensions this afternoon at 2:30 p.m. The members of this committee can be found at this link.
We look for the bill to be passed out of committee and immediately on to the House Floor. Now, whether the votes are there is still a question. IF passed out of the House, President of the Senate John Cullerton will call the bill. Watch out for more information as the day goes by.
House Amendment #2, SB 512 Analysis
SUAA opposes House Amendment #2 (HA 2), to SB 512.
Here are the bill's highlights:
This bill does not apply to existing SURS annuitants (p. 193 of the bill).
HA 2 is broad reform, that extends to all pension systems. It may exclude police and firefighters, but we will check on this. This analysis, however, is focused only on SURS.
For new SURS eligible employees hired in 2011 and after:
- Beginning on July 1, 2013, this amendment essentially caps earnings used to calculate pension benefits at $110,100 in salary (p. 185) and raises the retirement age to 67.
For SURS eligible employees hired before 2011:
- For employees hired before 1-1-2011, HA 2 creates a new benefit plan that will begin on 7-1-2013. On that date, existing employees will have to make a 1x irrevocable election for either, the traditional benefit plan, a revised benefit plan ( with minimal defined pension benefit) or a self managed plan (40 ILCS 5/15-134.7 new, p. 189).
- These employees have the opportunity to transfer into different pension programs every three years after 2013 and this plan freezes an employee's traditional pension benefits earned on 7-1-2013. After 7-1-2013, employees who stay in the traditional plan will earn a benefit equal to the minimum guaranteed under the Social Security program (SSA), which maxes out at $1187 per month. Here is a link to SSA benefits under HA 2 (40 ILCS 5/15-136.5 new, p. 212):
Employer contribution costs under HA 2:
- Are capped at 6% total University system payroll for traditional, revised and SMP plans (40 ILCS 5/15-155.1 new, p. 233).
Employee contribution costs under HA 2 (These are complicated formulas):
- Beginning 7-1-2013, for fiscal years 2014-2016, employees will pay 15.31% to maintain the traditional pension plan (up from approximately 8%) (p.237).
- After 2017, employees will pay an amount determined by SURS at a rate between 6 -17.31 % of earnings (p. 237) for traditional pension plan.
- In 2014, for employees who elect the revised plan, the cost is between 6-12% of earnings (p. 238).
- In 2014, for employees who elect SMP, the cost is 6% of earnings.
In short, this is a quick read of a 313 page bill that may contain some errors and omissions (We will correct them as we learn more about the complexities herein). In addition, this bill also changes survivor's benefits for existing employees (p. 187).
Still, in our opinion, HA 2, to SB 512 violates the Pension Protection Clause of the Illinois Constitution. It also diminishes and impairs the benefits guaranteed to university employees and other state employees.
We urge YOU to contact your state representative and state senator TODAY. Tell them to vote No on House Amemdment #2, to Senate Bill 512
Click here to find your representative and senator.
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