Illinois Governor-elect Bruce Rauner is the most influential player in U.S. pensions, according to a recent ranking by Institutional Investor.
The “Pension 40” project ranks the nation’s most important players in the fight over defined-benefit pension plans. The list includes everyone from executives and union members to academics, plan administrators and government officials.
Illinois’ $111 billion unfunded pension liability, the state’s ongoing court battle over last year’s pension bill and Rauner’s plan to fix Illinois’ pension mess by moving public employees to a 401(k)-style plan landed the governor-elect at the top of the 2014 Pension 40.
People across the county have their eyes on Rauner, waiting to see how he handles the nation’s worst-funded state-run pension plans.
The state’s latest attempt to reform its pension system – Senate Bill 1 – is tied in up in a legal battle. SB 1 attempted to increase retirement ages on a sliding scale, scale back cost-of-living adjustments and cap pensionable salary.
The good news for Rauner is that the Illinois Supreme Court recently agreed to expedite the legal process for SB 1. That means Rauner will have more direction on what can be done to address the state’s pension crisis sooner rather than later.
But regardless of how the Supreme Court rules on SB 1, there are reforms the new administration should move forward with immediately.
Illinois can and should enroll all new public employees in 401(k)-style self-managed plans going forward. This avoids constitutional conflict as it would not impact benefits for current public employees.
The state should also, at a minimum, allow current public employees to opt out of the current pension plan and enroll in self-managed retirement plans going forward. It’s unfair and immoral to force current public employees to participate in a nearly insolvent retirement system that they cannot exit and have no control over.
Finally, the incoming administration needs to explore the constitutionality of moving all current public employees into self-managed plans for future work, while protecting already-earned benefits.
There’s a reason Rauner topped Institutional Investor’s Pension 40 list – he has the potential to fix the nation’s worst pension crisis. And he has the solutions necessary to do so. But Illinois can’t afford to wait for the Supreme Court ruling. When Rauner takes office, he needs to move forward with the reforms that can be enacted immediately without constitutional conflict.
Benjamin VanMetre is the Senior Budget and Tax Policy Analyst at the Illinois Policy Institute
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Illinois Policy Institute
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