Pension Update

By Karen Kendall, Local 943 vice president


No one was happy when a Tier II was added to our pensions last year. All TRS and IMRF employees hired after January 1, 2011 are enrolled in Tier II. Now Senate Bill 512 wants to push current TRS employees into Tier II or a newly created Tier III. So far, IMRF has been left off of the reform legislation because according to State Representative Kevin McCarthy “IMRF is well funded and stable.”

If this bill passes, current TRS members would be forced to make an election into which tier they want to participate in effective July 1, 2012. Tier I members would choose between all three options. Tier II members would choose between option 2 and option 3. If you fail to make an election you will be moved into option 2.

Option 1. Traditional defined benefit plan. Higher contributions which will be recalculated every three years to reflect the true cost less 6% employer cost. As members move out of the plan or retire, costs will rise because no new members will be added.

Option 2. Revised defined benefit plan, Tier II. Employer and employee contributions will be 6%. Credit will be given for benefits already earned with level of pay frozen. See benefit levels established under SB 1946, P.A. 96-889.

Option 3. Self managed plan. Credit will be given for benefits already earned with level of pay frozen. Employee and employer contributions will each be 6%.

Discussions have already started regarding:

1. Pension burden is there – how do we handle it? The temporary state tax increase allowed this years current payment to be made but a devoted revenue stream is needed for the system to become better financed.

2. Any new legislation must be constitutional— “membership in any pension or retirement system of the state, any unit of local government or school district, or any agency or instrumentality thereof, shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired.” Will any changes to current member pensions sent to the courts for clarification follow case law and legislative intent?

3. Senate Bill 512 would alter the current funding law and would also increase members contributions without increasing the benefit.

Senate Bill 1946/Public Act 96-0889
Pension cuts for members hired after January 1, 2011

Current Plan	The 2nd Tier
Generally, retire as early as age 55 with maximum years of service, or 60 with 10 years of service	Retirement age 67 with 10 years of service or 62 with 10 years of service (annuity is reduced by 6% for every year under age 67)
No state limit on salary used for calculating benefit	Limit salary used to calculate benefit CPI limit (currently $106,800)
Generally highest salary for four consecutive years out of last 10	Highest salary for eight consecutive years out of last 10
Compounding of the COLA for TRS, no impact on IMRF 13TH check	No compounding of the COLA
Generally 3% compounded	COLA 3% OR ½ of CPI whichever is less
Post retirement employment varies widely from system to system	Benefits suspended if annuitant accepts employment in position covered by another pension system
Generally survivor benefit is 50% of annuity	Survivor benefit 66% of annuity

4. One devoted revenue stream would shift the normal state costs to school districts, universities and community colleges to be paid through property taxes. Both options make it a pension funding versus education funding priority.

Senate bill 512 would also mandate/allow choice in the three plan structure. This affects the benefit amount received by you and the cost of that benefit.

In September, supporters of reform will meet with all the involved labor groups to set up an organizational meeting on the pension reform process. Legislators have invited unions to offer input prior to the legislative veto session in October. Discussions will continue through the fall.

Remember last spring when pension reform was almost pushed down our paychecks? State representative Cross commented on our grassroots campaign ‘We Are One Illinois’ that was started with labor unions. He said it was the most effective he has ever seen. Thanks to our great IFT staff and everyone that made phone calls, sent letters and emails or had those face to face conversations with their legislators.

If we are informed and stay active we can be a major part of any changes. We are proud of the work we do so we all should be a strong advocate for our professions.

Websites for current updates are:

http://www.aft943.org

http://www.ift-aft.org

http://trs.illinois.gov

http://www.imrf.org