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