Bill\u00a0<\/a>sponsor state Sen. Chris Balkema, R-Channahon, described the proposal as an expansion of an option that already exists for university professors in Illinois, who currently have access to market-based retirement plans.<\/p>\n\u201cRight now, professors in Illinois already have this option. They can opt out of the traditional pension and contribute to a market-based retirement plan. That system was created because professors often move in and out of the state, and lawmakers didn\u2019t want to penalize them for changing jobs or leaving Illinois,\u201d said Balkema. \u201cParticipation has been strong because it\u2019s portable and market driven. This bill would give employees in the other four state pension systems the same choice, they could stay in the traditional pension or voluntarily invest in a market-based plan where they control how their money is invested and, especially for Tier 2 employees, could see higher returns over time.\u201d<\/p>\n
Tier 1 and Tier 2 are classifications for Illinois state employees based on when they were hired, with Tier 1 generally having older, more generous pension benefits and Tier 2 having newer, slightly smaller benefits.<\/p>\n
He said the proposal could actually improve recruitment and retention in public employment, rather than worsen turnover.<\/p>\n
\u201cIf today, I\u2019m halfway through my career and I\u2019d like to make a change, but I\u2019m locked into the pension system, I can\u2019t move,\u201d Balkema said. \u201cThis would make it a lot more portable. We want to attract and retain high-quality employees.\u201d<\/p>\n
Illinois\u2019 pension systems carry roughly $145 billion in unfunded liabilities, a figure Balkema said underscores the need for structural reform.<\/p>\n
He argues the proposal could reduce long-term risk for taxpayers while still honoring the state\u2019s existing pension obligations.<\/p>\n
\u201cSome people argue that if employees opt out and start investing in a market-based plan, they aren\u2019t contributing to the existing pension system, which could worsen short-term funding gaps,\u201d said Balkema.<\/p>\n
Balkema called that argument short-sighted.<\/p>\n
\u201cIf you look at the trajectory between now and 2045, and the state of Illinois continues to make the payments it has been making over the last two years, roughly $11 billion to $18 billion a year, that would allow us to climb out of the hole we\u2019ve been in for decades because governments did not pay into pension obligations as they should have,\u201d Balkema told TCS. \u201cThis bill, which allows a portion of employees to shift to a market-driven formula, would be a huge long-term cost savings because it gives employees more choice and reduces the burden on the state by limiting how many pensions it has to manage.\u201d<\/p>\n
Balkema also framed the proposal as a way to bring public-sector benefits more in line with the private sector.<\/p>\n
\u201cRun the numbers, folks,\u201d he said. \u201cIf you look at stocks and equities, year over year, decade over decade, you\u2019re going to end up with a lot more money in the big picture if you invest in the market versus waiting on a government pension system to provide for you and your family during retirement,\u201d said Balkema.\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"(The Center Square) \u2013\u00a0An Illinois state senator is pushing a sweeping but voluntary change to the state\u2019s pension…\n","protected":false},"author":2,"featured_media":474290,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[39],"tags":[28,101,5629,147,530],"class_list":["post-474289","post","type-post","status-publish","format-standard","has-post-thumbnail","category-personal-finance","tag-business","tag-economy","tag-illinois","tag-personal-finance","tag-personalfinance"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/474289","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=474289"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/474289\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/474290"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=474289"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=474289"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=474289"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}