Heading toward the end of another legislative session without any statewide pension reform, the Illinois General Assembly passed measures on the final day before a two-month recess to improve the health of the Chicago Park Employees' Annuity & Benefit Fund.
Both chambers passed the bill on Thursday and sent it to Gov. Pat Quinn. The bill raises the minimum retirement age to 58 from 50 and increases both employer and employee contributions.
Employee contributions will increase to 12% of salary from 9% by 2019 and stay there until the pension plan is 90% funded. Once it reaches that level, the contribution reverts to 10.5%. Employer contributions will jump to 2.9 times the employee contribution by 2019 from 1.1 times currently. It also will remain at that level until the plan is 90% funded. When that funded status is reached, the employer contribution reverts to the lesser of 2.9 times the employee contribution from two years prior or the amount needed to maintain a 90% funded status. Employers will also have to make additional contributions of $12.5 million each in 2015 and 2016 and $50 million in 2019.
Cost-of-living adjustments will change for all retirees to the lesser of 3% or half the Consumer Price Index from the current uncompounded 3%.
The bill would go into effect Jan. 1, 2015. Employees who are 45 or older by that date can still retire at age 50 with 30 years of service. Employees hired after Jan. 1, 2011, will actually see their retirement age decrease to 65 from 67.
The pension fund had $421 million in assets and $550 million in unfunded liabilities as of Dec. 31, for a 43.4% funded status. But the liability is a fraction of the roughly $100 billion in unfunded liabilities for state-administered pension funds that have plagued the state for years.
“This legislation reflects a balanced approach of reform and revenue, giving employees, retirees, and taxpayers the security and certainty they deserve, but that has long been missing,” Chicago Mayor Rahm Emanuel said in a statement. “Taxpayers can feel confident in a long-term plan that does not rely on them to shoulder the burden alone, and parks employees now know the pensions they have paid into — and are counting on — will be there for them and their families in their retirement.”
