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Print<\/a><\/p>\nGovernor JB Pritzker speaks at an event at the AFL-CIO in Springfield on August 14, 2025 (Capitol News Illinois photo by Jerry Nowicki)<\/p>\n
Gov. JB Pritzker is continuing to push a plan he introduced two years ago to reform Illinois pensions.<\/p>\n
The governor announced on Monday he is reviving a plan he introduced during his 2024 budget address that calls for fully funding pensions by 2048 and changing benefits calculations to comply with Social Security requirements. Despite years of negotiations that began even before Pritzker made his pitch, the General Assembly has not moved forward on Pritzker\u2019s or anyone else\u2019s pension reform plans.<\/p>\n
The hallmark of the plan calls for fully funding pensions by 2048, rather than reaching 90% funding by 2045 like current state law calls for.<\/p>\n
The governor also wants direct surpluses in the state fund that\u2019s dedicated to paying out tax refunds to the pension system, once all refunds are paid to taxpayers. Surpluses in that fund after tax season otherwise go to general fund operations under current law. But Pritzker\u2019s plan would ensure they go to pay pension debt.<\/p>\n
Illinois is also working to pay down a series of unrelated bonds by 2030 and 2033. Once those are paid off, Pritzker wants to use the revenues that had been dedicated to bond repayment to pay down pension debt.<\/p>\n
Pritzker also wants lawmakers to extend the state\u2019s pension buyout program for another two years through fiscal year 2028. The program has already been extended twice since it was created in 2018 and has reduced the state\u2019s pension liability by $2.9 billion, according to the governor\u2019s office. They predict extending the program will reduce the unfunded liability by another $1.4 billion.<\/p>\n
The state has also run into problems providing adequate benefits for people who were hired after 2010. The benefits, known as Tier 2, have raised concerns about compliance with Social Security and fairness to public employees. Federal law requires governments to provide benefits that are at least equal to Social Security. If a pension system fails to meet that \u201cSafe Harbor\u201d requirement, courts could force the employer, in this case the state, to make up the difference.<\/p>\n
That means whether or not lawmakers take immediate action on Tier 2 reform, added costs are likely on the horizon anyway.<\/p>\n
Pritzker\u2019s plan<\/a>\u00a0calls for adjusting the pensionable earnings cap to be equal to the Social Security wage base and put Tier 2 in compliance with Social Security requirements. Lawmakers allocated $75 million in this year\u2019s budget to cover costs to help bring benefits into compliance. The state\u2019s pension systems have told lawmakers they aren\u2019t sure of the total cost, however.<\/p>\n Where it stands<\/p>\n It\u2019s not clear what will move forward on pensions during the spring session, if anything. Lawmakers have vetted Pritzker\u2019s proposal, as well as proposals from labor unions, in numerous hearings\u00a0over several years<\/a>.<\/p>\n The We Are One coalition, a group of unions asking lawmakers to reform Tier 2 to comply with \u201cSafe Harbor\u201d and make benefits more attractive to workers, said Pritzker\u2019s continued push for his plan ignores \u201cthe growing recruitment and retention crisis driven by the inadequate Tier 2 pensions.\u201d<\/p>\n \u201cNo pension plan will pass without the support of the public sector unions whose members are most impacted by this system,\u201d the coalition said in a statement. \u201cOur bill would not adversely affect the state\u2019s credit rating, not add to the unfunded liability, and not add significant costs to the state budget \u2013 all goals the governor has previously laid out.\u201d<\/p>\n Read more:\u00a0Tier 2 pension reform bill moves forward, but Pritzker says there\u2019s \u2018a lot more work\u2019 to do<\/a><\/p>\n A\u00a0bill<\/a>\u00a0supported by the coalition passed a House committee in October, but lawmakers agreed to continue working on the issue this spring and its fate is unclear. The plan called for lowering the minimum retirement age for many Tier 2 employees, raising the salary cap to equal the Social Security wage base and better cost-of-living adjustments and final average salary calculations for workers.<\/p>\n Pritzker said last fall the bill needs \u201ca lot more work\u201d before it\u2019s ready to go.<\/p>\n State of pensions<\/p>\n Illinois remains a long way off from the 2045 target, but there have been small signs of progress in recent years.<\/p>\n