PENSION REFORM PROPOSAL

Details as of 11/29/13

Funding schedule and method for certifying contributions: Establishes an actuarially sound funding schedule to achieve 100% funding no later than the end of FY 2044. Contributions will be certified using the entry age normal actuarial cost method E!"#$ which averages costs evenly over the %ensioner&s em%loyment and results in level contributions. Su lemental contributions: 'he (tate will contribute i# )*+4 million in FY 201,$ ii# )1 billion annually thereafter through 204- or until the system reaches 100% funding$ and iii# 10% of the annual savings resulting from %ension reform beginning in FY 201+ until the system reaches 100% funding. 'hese contributions will be .%ure add on$/ which means (tate contributions in any year will not be reduced by these amounts. Funding guarantee0 1f the (tate fails to ma2e a %ension %ayment or a su%%lemental contribution$ a retirement system may file an action in the 1llinois (u%reme Court to com%el the (tate to ma2e the re3uired %ension %ayment and4or su%%lemental contribution set by law each year. Em loyee contribution: Em%loyees will contribute 1% less of their salary toward their %ension. Annual annuity ad!ustment "#OLAs$: Future C56!s will be based on a retiree&s years of service and the full C71. 'he annual increase will be e3ual to *% of years of service multi%lied by )1$000 )800 for those coordinated with social security#. 'he )10004)800 will be ad9usted each year by the C71 for everyone retirees and current em%loyees#. 'hose with an annuity that is less than their years of service multi%lied by )10004)800$ or whatever the amount is at the time of retirement$ will receive a C56! e3ual to *% com%ounded each year until their annuity reaches that amount. !dditionally$ current em%loyees will miss annual ad9ustments de%ending on age0 em%loyees -0 or over miss 1 ad9ustment year 2#: 4,;4< miss * ad9ustments years 2$ 4$ and +#: 4+;44 miss 4 ad9ustments years 2$ 4$ +$ and 8#: 4* and under miss - ad9ustments years 2$ 4$ +$ 8$ 10#. Pensionable salary ca : !%%lies the 'ier 11 salary ca% )10,$,<1 for 201*#$ which is annually ad9usted by the lesser of *% or = of the annual C71;>. (alaries that currently e?ceed the ca% or that will e?ceed the ca% based on raises in a collective bargaining agreement would be grandfathered in. Retirement age: For those 4- years of age or under$ the retirement age will be increased on a graduated scale. For each year a member is under 4+$ the retirement age will be increased by 4 months u% to - years#. Effecti%e rate of interest "ERI$: For all %ur%oses$ the E@1 for (>@( and the rate of regular interest for '@( will be the interest rate %aid by *0;year >.(. 'reasury bonds %lus <- basis %oints. &ARS 'ier ( fi): Arings B!@( 'ier 2 salary ca% and annual ad9ustment in line with other 'ier 2 benefits. Pension abuses: 7rohibits future members of non;governmental organiCations from %artici%ating in 1D@F$ (>@($ and '@(. 7rohibits new hires from using sic2 or vacation time toward %ensionable salary or years of service a%%lies to (E@($ (>@($ '@($ 1D@F$ Coo2 County$ and Chicago 'eachers#. *efined contribution lan: Aeginning Euly 1$ 201-$ u% to -% of 'ier 1 active members have the o%tion of 9oining a defined contribution %lan. 'he %lan must be revenue neutral and em%loyee contributions will be e3ual to those for the defined benefit %lan. 1f a member chooses to o%t into the defined contribution %lan$ benefits %reviously accrued in the defined benefit %lan will be froCen. #ollecti%e bargaining: !ll %ension matters$ e?ce%t %ension %ic2u%s$ are removed from collective bargaining. +ealthcare ayments: 7rohibits the (tate %ension systems from using %ension funds to %ay healthcare costs.