Provisions of SB1 Pension Bomb

4 Dec

PROVISIONS OF THE BILL:
Collective Bargaining:
“Employers shall not be required to bargain over matters affected by the changes, the impact of changes
and the implementation of changes made by this amendatory Act”. “The provisions of this Section shall
not apply to an employment contract or collective bargaining agreement that is in effect on the effective
date of this amendatory Act. However, any such contract or agreement that is subsequently modified,
amended, or renewed shall be subject to the provisions of this Section.”
Reduction in Contribution:
Reduces the TRS employees’ contribution to the retirement system by 1%.
Pension Stabilization Fund:
State must make supplemental payments from the Pension Stabilization Fund to the pension
systems each year to assure 100% funding of the pensions systems.
Pensionable Salary Cap:
Current employees who participate in TRS will have a cap on their pensionable salary the same as
Tier II employees (those hired after January 1, 2011). The cap is set at about $110,000, though the
provision is grandfathered in so an employee currently working would be capped at his/her current salary.
Increase of Retirement Age:
For those current employees 46 years old or older on June 1, 2014, there would be no change in the
retirement age. For others, the retirement age would increase by four months for every year under the age
of 46, maximum of five years added.
Cost of Living Adjustment:
For both current annuitants and current employees, the 3% compounding COLA would only apply to
$1,000 multiplied by the number of creditable years of service (if one worked for 30 years, the 3%
compounding COLA would apply to the first $30,000 of pension). The $1,000 would increase each year
by CPI.
Current employees who participate in TRS would have their COLA suspended upon retirement.
Employees 50 years old or older would not receive an adjustment in year 2; employees 49-47 would not
receive adjustments in years 2, 4, and 6; employees 46-44 would not receive adjustments in years 2, 4, 6,
and 8; employees 43 and under would not receive adjustments in years 2, 4, 6, 8, and 10.
ERO Age:
For the Early Retirement Option (ERO), the references to age 60 are increased at the same proportion as
the increase in retirement ages.
Pension Funding:
State pensions must be 100% funded by 2044.
Funding Guarantee:
Beginning July 1, 2014, “the State shall be obligated to contribute to the system in each fiscal year an
amount not less than the sum of the State’s normal cost for the year and the portion of the unfunded
accrued liability assigned to that year by law”. “If the State fails to pay an amount required it shall be the
obligation of the Board to seek payment of the required amount in compliance with the provisions of this
Section and, if the amount remains unpaid, to bring a mandamus action in the Supreme Court of Illinois to
complete the State to make the required payment.”
Actuary Report:
An actuary report and certification of the amount owed to the pension systems is due November 1 of each
year.
Defined Contribution Plan:
There is creation of an optional defined contribution plan for Tier I participants.
Sick/Vacation time:
For employees hired after the effective date of the Act, salary (for pensionable purposes) may not include
payment for unused sick or vacation days.

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