Madigan’s Disastrous Pension Bill Passes

Michael Madigan finally puts forth a pension bill and it passed the Illinois House. It now heads back to the Senate. Before I explain why this bill is a disaster, let’s look at the overview of the major points of the HA#1 to SB 1 via Reboot Illinois:

  1. New funding schedule
  2. New method for certifying contributions EAN (entry age normal actuarial cost method) vs PUC (projected unit credit actuarial method)
  3. Supplemental contributions beginning in FY 20 of $1 billion in addition to the state’s scheduled contributions
  4. Provide a funding guarantee where the systems will have a right to bring a mandamus action to compel the State to make the payment
  5. Establish a pensionable salary cap for Tier I employees by applying the Tier II salary cap to Tier I employees
  6. New method of calculating the COLA
    1. Retired members will keep the compounded 3% annual increases they received up until the enactment
    2. Future COLAs will be based on 3% of a maximum annuity amount based on their years of service
      1. $1,000 for each year the employee had worked
      2. $800 for those coordinated with Social Security
    3. Current and future retirees would have the first or next year in which they can receive their COLA delayed.
      1. Retirees who are age 67 and older would be unaffected by this delay.
      2. Under age 67 would have their COLA paused until either they reach age 67 or until the 5th anniversary of their retirement, whichever comes first.
  7. Increase the retirement age for employees under 45 years old.
    1. No change for those 45 years of age or older
    2. Current Tier I members who are under 45 years old (). This language was approved by the House in HB1166 (Madigan) and is included in the Cross-Nekritz pension reform package (HB 3411).The retirement age is increased by the following schedule:
      1. Age 40 to 44 – additional 1 year added to the applicable system’s minimum retirement age
      2. Age 35 to 39 – additional 3 years added
      3. Below 35 – additional 5 years added
  8. Increase employee contributions by 2%.
  9. Eliminate the subject of pensions for collective bargaining – Bargaining units and employers with participants in the State systems would be prohibited from negotiating changes related to pensions
  10. Fix the COLA for Tier II members of GARS – lowers the General Assembly Retirement System down to one-half of CPI
  11. Prohibit non-governmental organizations from participating in State systems.
  12. Change the effective rate of interest – suggests that the Comptroller adopt a more conservative number for what is known as the “effective rate of interest” (“ERI”)
  13. Prohibit the use of pension funds to pay costs associated with healthcare
  14. Require separate appropriation request for employer normal cost and amortization of the unfunded liability

While there are several good points about this like the increase in employee contributions and prohibiting non-governmental organizations, the bad outweighs the good.  The worst item in the bill is the ability to sue the state to force contributions.  This is just a disaster waiting to happen and allows the Springfield politicians to continue to blame others instead of being held accountable for their own failures to fix the looming pension crisis, which this bill does not fix. At best this bill maintains a status quo on pensions and at worst (more likely) this will make the crisis worse in just a few short years.

*More analysis coming soon.

The final vote was 62 (Yes) – 51 (No) – 2 (Present) with Republicans voting in favor of this atrocity and protecting Speaker Madigan and Democrats in the process. To make it easy for reference, the Republicans who voted to protect Madigan and the Democrats they protected are listed below as well.

Voting Yes (22)
Voting No (25)
Bellock, Patti
Cross, Tom
Demmer, Tom
Durkin, Jim
Halbrook, Brad
Hatcher, David
Hays, Chad
Ives, Jeanne
Kay, Dwight
Kosel, Renee
Leitch, David
McSweeney, David
Morrison, Tom
Osmond, JoAnn
Roth, Pam
Sandack, Ron
Schmitz, Tim
Senger, Darlene
Sosnowski, Joe
Sullivan, Ed
Tracy, Jil
Wheeler, Barb
Beiser, Dan
Cassidy, Kelly
Chapa LaVia, Linda
Cloonen, Kate
Costello, Jerry
D’Amico, John
Davis, Will
DeLuca, Anthony
Fine, Laura
Ford, LaShawn
Hoffman, Jay
Jackson, Eddie
Lang, Lou
Martwick, Rob
Mautino, Frank
Mayfield, Rita
Rita, Robert
Scherer, Sue
Sims, Elgie
Smiddy, Mike
Thapedi, Andre
Verschoore, Patrick
Walsh, Lawrence
Welch, Chris
Williams, Ann



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About Lennie Jarratt

Small Business Owner, Education Watchdog, FOIA expert, Founder of For Our Children's Future


  1. The fraud on the taxpayers continues at epic levels by this latest scam. This Pension Plan needs to be totally restructured and reformed not adjusted at the margins. There should never be a guaranteed 85% of your highest salary annual payout that just does not happen in the real World and especially not on any investment in the market and Hedge funds unless all the downside risk is incurred by the taxpayers to cover all downsides and the associated time value of money losses. Add to this the 40% inflated final salary in all the Public Sector Labor Agreements and the 50% over compensation at the base functional levels and this scam is nothing but outright fraud on the taxpayers. A basic investment calculation at the highest levels of annual contribution 18.4% of salary here, invested in a conservative plan maximizing return and protecting capital with a 30 year working time frame the payout could not exceed $44K annually. That is nowhere near the $100K plus these people are getting plus exorbitant COLAs. This latest reform scam shows the corruption and criminals at work here something that is common practice in the Mafia run Russian Government operations.


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  2. […] are many on both sides of the aisle complaining about the failure to pass pension reform. Both the Madigan plan and the Union Backed Cullerton plan made the pension crisis worse and did not solve the long term […]

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