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Pension Reforms continue as Senate addresses Cook County

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The Senate has approved a comprehensive pension reform plan for two Cook County pension funds projected to run out of money in 2038. Cook County President Toni Preckwinkle visited the Capitol to explain the legislation in the Senate Executive Committee. The reform plan was negotiated with unions representing Cook County and Cook County Forest Preserve employees; 60 percent of the affected workforce belongs to bargaining units that support the proposal.

“This negotiated plan embodies the balanced approach and commitment to shared sacrifice that should always carry the day when we make decisions affecting individuals’ life savings,” said State Senator Kwame Raoul, the measure’s Senate sponsor. “It also contains the unique proposition that as the funds’ fiscal health improves, benefit reductions should be restored.”

The plan (House Bill 1154) makes the following changes:

  • Caps the salaries used to calculate Tier I employees’ benefits but allows the cap to increase with inflation
  • Slows members’ rate of benefit accrual
  • Gradually increases the retirement age for Tier I employees; the Tier II retirement age will drop from 67 to 65
  • Reduces COLAs for Tier I employees who retire after January 1, 2015; Tier II COLAs will remain the same
  • Increases the employee contribution
  • Increases the employer contribution from 1.54 times to 1.9 times the employee pay-in
  • Eliminates free retiree health care provided by the funds but creates a health care trust fund that will subsidize health insurance for annuitants
  • Will increase COLAs for years in which the funds are more than 100 percent funded but will decrease the rate of pension accrual in years in which the funding level dips below 59 percent
  • Contains an intercept mechanism that will kick in to enforce the employer contribution component if the County fails to make its required payments

The plan is projected to achieve 100 percent funding by 2043. The House must approve the proposal before it goes to the governor’s desk.