November 29, 2013 / 11:54 PM / 5 years ago

Factbox: Details emerge on Illinois pension reform deal

CHICAGO (Reuters) - Illinois legislative leaders on Friday revealed more specifics on the deal they reached on Wednesday to overhaul the state’s under-funded public pension system.

State lawmakers are expected to take up pension reform next week.

Illinois has the worst-funded public employee pension system among the 50 states.

Here are details on the deal, according to an overview released by the Illinois House speaker’s office:

* The retirement age for public workers who are currently aged 45 and under would gradually increase.

* For high-wage earners, the state would set a cap on the portion of their salaries used to calculate pension benefits.

* The current 3 percent annual cost-of-living adjustment (COLA) for retirement pay would be subjected to a formula aimed at benefiting longer-term, lower earning workers. Increases would be tied to the inflation rate.

* COLAs would be suspended for anywhere from one to five years, depending on the age of the worker.

* Workers would see a 1 percent decrease in their required pension contributions.

* Workers looking for an alternative to state-funded pensions would have the option of contributing toward a 401(k)-like investment vehicle.

* Illinois would contribute $364 million to the public pension fund in FY 2019 and $1 billion annually thereafter through 2045, or until the system reaches 100 perfect funding.

* Illinois state-employee pension funds would have a right to go to court to force the state to make its required pension payments.

* Illinois pension systems could not use pension funds to pay healthcare costs.

Reporting by Tom Polansek; editing by Andrew Hay

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