It’s a new year, and just like many of us, Illinois lawmakers in the General Assembly still need a New Year’s resolution. In the ideal world, that resolution would be to come up with a broad-based, long-term plan to fix the state’s problems, once and for all. But we’re not naïve. We know that this set of lawmakers won’t enact reforms until they’re absolutely forced to.
The good news is Wirepoints spent much of 2020 crafting a comprehensive pension reform plan for when real solutions finally become politically expedient. We recently mailed our 112-page reform book directly to each legislator, highlighting the three key elements they need to pursue. We list them – in simple terms – below.
1. Move all state workers to 401k-style accounts going forward
State workers will no longer earn pension benefits going forward, but they keep all the benefits they’ve already earned.
For future benefits, all workers will have an individual 401k-style account they own and control. Employees will contribute 8% of their paycheck to their account and the state will match it with a 7% contribution.
2. Suspend automatic 3% raises (COLAs) for most retirees until pensions are fully funded
Currently, state retirees receive a 3% compounded COLA automatically every year, one of the most generous in the country. Going forward, COLAs will be suspended for most retirees until the pension plans are fully funded. Pensioners with annual pension benefits of less than $50,000 will receive a 1% COLA increase each year.
3. Require state retirees to pay their fair share of health insurance premiums
Currently, retired Illinois state workers get free health insurance coverage if they worked for 20 years.
Going forward, state retirees will be required to pay, on average, about half of their health insurance premiums, depending on their income, retirement age and years of service. The cost for public sector workers nationally is, on average, about 54%.
Illinois lawmakers don’t have to reinvent the wheel to reform pensions
Wirepoints’ plan is based on a 401k-style plan that’s existed for Illinois state university workers since 1998. More than 20,000 workers have already opted into those defined contribution accounts that offer more flexibility, portability and individual control.
All our Illinois legislators need to do is extend that same, successful plan to all state workers.
Wirepoints’ reform plan will save the state $5 billion a year, far more than the progressive tax hike would have raised. It will also slash $54 billion from Illinois' pension shortfall, reducing the debt on every Illinois household.
You’ve told Illinois lawmakers you don’t want more tax hikes by rejecting their progressive tax proposal. Now tell them you want reforms. Partner with Wirepoints to call for a pension amendment and pension solutions.