The Illinois Legislature approved a bill to improve funding at Chicago’s municipal and laborer pension plans that mirrors the one vetoed by Gov. Bruce Rauner in March.
The House voted 63-45 in favor of the measure Thursday.
The bill, which passed the Senate on Jan. 25 in a new congressional session, is intended to improve the pension plans' funding ratios to 90% each by 2057 through higher contributions for certain employees and increased city contributions.
The bill requires that Chicago begin making contributions on an actuarial basis to both pension funds in 2023.
It also raises payroll contributions for participants of both pension funds hired after Jan. 1, 2017, to 11.5% from 8.5%, and reduces their age of eligibility for full benefits to 65 from 67. Employees hired on or after Jan. 1, 2011, will have had the option of increasing their payroll contributions to 11.5% from 8.5% in return for their retirement age being reduced to 65 from 67. Employees hired prior to 2011 are not affected.
Since the earlier vetoed bill was passed by a lameduck Legislature in January, without an opportunity to vote on overriding the veto, lawmakers needed to introduce a new bill for their second attempt.
In a news release following his March veto, Mr. Rauner called the city pension funding plan another “kick-the-can approach to pension funding” and stressed that more “comprehensive, long-term pension reform” for the state was needed. Representatives for Mr. Rauner on Friday referred to his comments in March.
The $4.3 billion Chicago Municipal Employees' Annuity & Benefit Fund had $18.6 billion in liabilities as of Dec. 31, 2015, for a funding ratio of 24.7%. The $1.2 billion Chicago Laborers' Annuity & Benefit Fund has a funding ratio of roughly 45%.
Illinois’ five state retirement systems face roughly $130 billion in combined unfunded pension liabilities combined.