Changes that would make improve benefits for government employees hired since 2011 could be on the table when lawmakers return to Springfield in January.
The General Assembly passed legislation in 2010 to create a second tier of state pension benefits in hopes of reducing long-term liabilities. But the latest benefits structure for employees entering the government workforce after 2010, known as Tier 2, has raised concerns about its compliance with Social Security and fairness.
Not all public employees are covered by Social Security. But federal law requires governments to provide benefits that are at least equal to Social Security. If a pension system fails to meet that “Safe Harbor” requirement, the employer must make up the difference.
While calls for changes have grown louder in recent years, the underlying concerns aren’t new, Sen. Robert Martwick, D-Chicago, said.
“It was contemplated by members of the General Assembly during debate for its passage that Tier 2 could create a problem if it didn’t satisfy Safe Harbor,” Martwick said.
Tier 2 employees also say the benefits they receive, which are not as generous as those received by Tier 1 employees who were hired before 2011, will make retirement challenging and are hurting recruitment and retention in public sector jobs.
Lawmakers are tentatively scheduled to be back in Springfield Jan. 4 for a lame duck session before new lawmakers are sworn in Jan. 8.
“Whether that will all come together in a fashion that is ready for lame duck or not remains to be seen,” Rep. Stephanie Kifowit, D-Oswego, told Capitol News Illinois.
Latest proposal
Kifowit’s House pensions committee has held more than a dozen hearings exploring pension reform in the past two years, including on multiple bills she has filed. The latest bills, House Bill 5909 and Senate Bill 3998, are a product of the “We Are One Illinois” coalition of labor unions seeking Tier 2 reform.
“We understand this is a big lift,” Illinois AFL-CIO Secretary-Treasurer Pat Devaney said in a Dec. 13 committee hearing. “We’re going to continue to push for a lame duck solution.”
The union-backed proposal would aim to fix the “Safe Harbor” flaw of Tier 2, in part by increasing the maximum salary used to calculate pension benefits by more than $40,000.
Unions and government employers have also described a growing challenge to retain and recruit people to government jobs, in part because of Tier 2 benefits. Illinois has a significant staffing shortage, Kifowit noted.
Another key fix in the bills would put the Tier 2 retirement ages back in line with Tier 1. Under current law, Tier 1 employees are eligible for retirement benefits about five years earlier than Tier 2.
— Capitol News Illinois is a nonprofit, nonpartisan news service that distributes state government coverage to hundreds of news outlets statewide.
