With Illinois facing a state employee public pension debt estimated at $100 billion, Senator Jim Oberweis offered a pension reform plan April 30 that could save taxpayers more than $50 billion in the coming fiscal year.
The 25th District Senator presented his Senate Bill 2026 as part of an extended discussion by the Senate Executive Committee of pension reform options.
“Most of you probably know that I have had some background in making ice cream,” Senator Oberweis said, referring to his position as Chairman of Oberweis Dairy, a business founded by his grandfather. “However, I spent most of my working career in the financial services business. I started a money management company that today manages approximately $1 billion in pension assets. I currently serve on the Moose International Pension Investment Committee, and I have served as a consultant brought in to try to turn around a company that was on the verge of bankruptcy. To be honest, I view Illinois very much like a company on the verge of bankruptcy.”
The 25th District Senator told his colleagues that Senate Bill 2026 would reduce annual pension payments by $2 billion a year, freeing up money for priorities such as education, human services and public safety. Senator Oberweis says the pension crisis has unfortunately reached a point where tough decisions need to be made about the currently unsustainable benefits provided to state employees.
An initiative of the Illinois Policy Institute, Senate Bill 2026 would:
? Reduce Illinois’ unfunded liability immediately by almost 50 percent;
? Provide that our pensions systems would be 100 percent fully funded by 2045;
? Reduce our annual payments to approximately $4.7 billion, level payments going forward – an almost 30 percent reduction from our current required payment;
? Protect all earned defined benefits, but would suspend COLAs;
? End defined-benefit plans for future employees and replace them with defined-contribution plans.
“Going forward, current employees would have a defined-contribution plan set up, similar to a 401k plan. The current employee would contribute 8 percent of their earnings, and the employer would contribute 7 percent,” Senator Oberweis said. “This is only bill I am aware of that would prevent our underfunding situation from ever occurring again.”