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On April 14, Senator Daniel Biss (D – Evanston) and Representative Elaine Nekritz (D – Northbrook) held a press conference to decry Governor Rauner’s substandard pension proposal and introduce resolutions calling for a rigorous examination of the governor’s pension plan.
The resolutions, House Resolution 358 and Senate Resolution 315, call for the State of Illinois to work with the federal government to study the constitutionality and sustainability of 1) having employees pay into a Tier 2 level pension and furthermore, 2) the idea of moving Tier 1 employees (who are much closer to retirement) into Tier 2 before the State knows if Tier 2 is even sustainable and federally legal.
Senator Biss spoke on this complicated issue and proposed a way for the State to move forward toward a solution.
The potential federal problem is that when workers are not paying into social security, it is federally mandated that those employees must be paying into a government retirement plan that is equivalent to Social Security– in this case, in Illinois, government employees paying into Tier 2 benefits. According to many experts, Tier 2 does not appear to fully meet the “social security equivalency” standard.
So the question persists – does Tier 2 qualify as a placeholder for Social Security? If not, a pension fix plan that places thousands more employees into this tier would prove disastrous for employees and the future of the states’ pension systems.
Paying into Social Security could also increase costs for the state and local school districts, rather than relieving spending pressures.
According to Sen. Biss, The best and most efficient way to receive an answer as quickly as possible, is through a formal request from the pension systems to the IRS asking if a proposed pension fix like the governor’s is indeed feasible and legal.
If the State doesn’t seek answers to these questions and once and for all find a sustainable, affordable and actuarially sound pension solution, it will find itself in a hole without a means to climb out.
“The road to pension hell is paved with rash actions,” said Senator Biss.