Illinois should consolidate the 649 downstate and suburban police and fire pension plans into two new funds, a task force recommended to Gov. J.B. Pritzker in a report Thursday.
The Pension Consolidation Feasibility Task Force, which was created by Mr. Pritzker and consists of financial professionals, former elected officials and representatives from municipalities and labor unions, recommends consolidating the assets of the plans because doing so would generate investment returns far beyond the annualized 2% the report says the plans achieved in the past 10 years due to their small sizes.
According to the report, Illinois has the second highest number of local pension systems and the ninth fewest assets per any system in the United States.
Of the total 649 plans potentially affected by consolidation, 424 plans, or 65.3%, have less than $20 million in assets each.
Overall, the 649 plans have a total of $14.3 billion in assets, and the task force notes that consolidation would generate a collective $820 million to $2.5 billion in investment returns over the next five years.
The task force recommends the creation of two new funds: One for municipal police beneficiaries and one for municipal fire beneficiaries.
Each fund would be governed by a board with equal employer and employee representation, and each municipal pension plan would maintain an individual and separate account within the consolidated funds so plans' assets and liabilities are not adversely shifted. The task force recommends establishing trusts separate from the state treasury.
Non-hazardous municipal and school district employees in Illinois outside of Chicago are part of the $42.8 billion Illinois Municipal Retirement Fund, Oak Brook, created in 1939. The report also cited IMRF's funding ratio of 90.4%, nearly 50 percentage points above the next best-funded state plan, as a reason for police and fire pension plan consolidation.
The task force includes former IMRF executive director Louis Kosiba.