Bill to save 2 city- worker pension funds passes 91- 16
SPRINGFIELD — The Illinois House on Thursday passed a bill to help salvage two city worker pension systems.
The House voted 91- 16 on the bill, which provides for taxpayers and government employees putting more money into retirement systems that cover laborers and municipal workers.
“The people of Chicago have decided to fix our pension problem,” the bill’s House sponsor, Rep. Barbara Flynn Currie, D- Chicago, said before the vote.
“We are asking you to change the statutory structure that will make it possible for the city of Chicago to stabilize these pension funds to avert bankruptcy to make sure that the recipients of benefits under these programs will not go out empty handed,” Flynn Currie said. “The workers are helping. The taxpayers are helping financially, and now it’s time for us to help just from a regulatory perspective.
The Illinois Senate was not expected to vote on the city pension bill on Thursday. But it can still do so in January during a lame duck session.
Under the plan, city taxpayers will contribute millions more a year to the municipal workers’ and laborers’ pension fund.
To pay for the increased contributions, the City Council approved a new tax on city water and sewer service.
Without action, the Municipal Employees Pension Fund would be left with a gaping hole in 2023 — even after a utility tax is fully phased in — that would almost certainly require a steady stream of additional tax increases to honor the city’s ironclad commitment to reach 90 percent funding over a 40- year period.
Doing nothing would have drained the city’s largest pension fund — from which aldermen draw their own retirement checks. The fund would have gone bankrupt by 2025, forcing the city to pay retirees on as- you- go basis. That would take an additional $ 900 million to $ 1 billion per year that Chicago taxpayers don’t have.
In mid- September, the Council easily approved the mayor’s plan to slap a 29.5 percent tax on water and sewer bills to save the Municipal Employees pension fund. But the Illinois General Assembly still needed to sign off on employee concessions tied to the deal as well as the five- year ramp to actuarially required funding.
Same goes for the mayor’s plan to save the Laborers pension fund, bankrolled by a previously approved, 56 percent tax on monthly telephone bills.
Those concessions call for employees hired after Jan. 1 to become eligible for retirement at age 65 in exchange for an 11.5 percent pension contribution. That’s three percentage points higher than employees pay now.
Veteran employees hired after Jan. 1, 2011, get to choose between contributing 11.5 percent for the right to retire at 65 or continuing to pay 8.5 percent and waiting until 67 to retire.
The legislation approved Thursday will require newly elected Chicago aldermen and citywide elected officials to serve longer to achieve the maximum 80 percent city pension.
The legislation states that aldermen elected after passage will no longer be able to purchase additional years of service to achieve a maximum pension sooner.
They will be treated like everybody else. No more opportunity to contribute an additional 3 percent a year to their pensions — to 11.5 percent of their annual salary — to earn additional years of service and the right to retire at an 80 percent pension after just 20 years of service.
They’ll have to make the same 11.5 percent pension contribution required of new employees and accumulate 34 years of service to achieve a maximum 80 percent pension.
Under pressure from union leaders, top mayoral aides dropped plans to change the makeup of the board overseeing the Municipal Employees Pension Fund, from three elected representatives of city employees and two mayoral appointees to three and three.