(The Center Square) – Illinois taxpayers can expect to pay more for public employee retirees hired after 2011 as some worry benefits won’t be equal to Social Security.
Total unfunded liability for the state’s five pension funds is about $140 billion. The pension systems are about 46% funded of total anticipated costs. Tier II pensions were created 14 years ago to help control those costs, but the total dollar amount of the unfunded liability has increased since then.
The state’s largest public sector retirement system, the Teachers’ Retirement System, is about 45% funded. Last month, Andrew Bodewes with TRS said in 2024, teachers, who don’t get Social Security, gave 9% of their pay to pensions, or about $1.2 billion. Investment returns bring in revenue as well, or $5.7 billion in 2024. State taxpayers covered $6.1 billion.
Total TRS holdings is $71 billion, but the fund has $83 billion in unfunded liabilities.
Bodewes said there’s growing concern that benefits for Tier II employees may not be compliant with federal law.
“We are a Social Security replacement plan,” he told legislators during a House committee.
“There is ongoing concern whether we will be able to, in the long term, maintain that Social Security replacement status with the Tier II benefit structure not complying with the plain language of the federal law on what they require you to offer in benefits and be a Social Security replacement plan.”
Bodewes said they don’t know yet if they have anyone in the system who is impacted.
“It is reasonable to assume that we will and that we will in the relatively short term future,” he said.
TRS is just one of several taxpayer-funded public sector pension plans. The state has TRS, the State Employees Retirement System, the State Universities Retirement System, and pension systems for the state’s judges and members of the General Assembly.
Talks have been ongoing on trying to increase Tier II benefits to address that issue, but the overall taxpayer cost isn’t known.
State Rep. Steven Reick, R-Woodstock, said the governor’s proposed budget for the coming fiscal year gives a $78 million increase to address the issue. Last week on the House floor, Reick said that’s just for three of the state’s pension funds.
“And not to mention the fact that somebody’s got to pay for the Social Security wage base adjustment out of those other 12 plans, and who’s going to be responsible for that money, the taxpayers of Illinois,” he said.
Other plans Reick said are going to be impacted but not considered in the $78 million infusion are the judges, General Assembly or the Chicago teachers pensions fund, plus a dozen other public sector plans throughout the state.
Reick read from a recent Segal report that said making up for possible Social Security equivalent shortfalls could cost taxpayers more than $6 billion by 2045.
This article was originally published at www.thecentersquare.com
