The Illinois Legislature’s Commission on Government Forecasting and Accountability recently released an analysis of a union-backed pension reform plan. House Bill 5909 is estimated to cost taxpayers $29.76 billion through 2045. It will add substantial financial burdens to the state starting from fiscal year 2027.
The reform aims to bring state pensions into compliance with federal Social Security laws. It includes key changes such as adjusting final average salary calculations and reducing the retirement age for Tier 2 recipients to match Tier 1 recipients. The projected cost of these changes includes $6.2 billion to meet the federal Social Security safe harbor provisions.
Another $1.1 billion is needed to adjust final average salary calculations. $4.4 billion is required for cost of living adjustments. $11.3 billion is needed for lowering the retirement age.
Gov. JB Pritzker has expressed support for bringing pensions into compliance with Social Security norms.
New pension reform costs analyzed
However, he remains opposed to any proposal that risks the state’s balanced budget. His spokesperson clarified that while the governor supports necessary changes, he will not back any pension plan that could negatively impact the state’s credit rating or financial stability. State Sen.
Rob Martwick, the bill’s sponsor, acknowledged the state’s financial limitations. He called his proposal a “great starting point” despite recognizing that Illinois and Chicago’s current financial status might not support the proposed changes. Public employee unions have been vocal about their opposition to the existing Tier 2 system.
It was passed in 2013 as a cost-saving measure by significantly reducing benefits for newly hired employees. The unions argue that the current system is unfair and unsustainable. While the new bill’s price tag is much higher than previous proposals, which included more manageable funding plans, the discussions and negotiations continue.
Both sides agree that further adjustments are needed to ensure the state can afford any proposed changes. The debate over Illinois’ pension reform plan is ongoing. Stakeholders and lawmakers are striving to find a financially viable solution that aligns with federal requirements and addresses union concerns.
