A measure at the Illinois statehouse that looks to extend the pension buyout program is now onto the Illinois Senate after finding nearly unanimous support in the House.
Illinois’ pension funds for state retirees and teachers are among the worst-funded in the nation, with around $140 billion in unfunded liability.
House Bill 4292 would extend a recently enacted pension buyout program and amend the General Obligation Bond Act to authorize an additional $1 billion to State Pension Obligation Acceleration Bonds.
Eligible participants can receive accelerated benefit payments instead of a pension benefit, or for a reduction in the increases to their annual retirement annuity and survivor’s annuity.
This extension would move the sunset of the program from June 30, 2024, to June 30, 2026.
State Rep. Bob Morgan, D-Deerfield, said the measure can help put money into the pockets of retirees and allow them to take care of problems now, rather than having to wait.
“This allows retirees to pay for their medical bills, to pay for their mortgage, to pay for other expenses,” Morgan said. “It’s not accepting the idea that 20, 30, 40 years down the road their pension is going to cover the costs they need.”
State Rep. Michael Zalewski, D-Riverside, said the legislation so far has been a success for the state.
“The state has struggled over the last five to ten years with public pensions,” Zalewski said. “The program that we are enhancing with this bill has been wildly successful.”
The program is voluntary for eligible beneficiaries, Morgan said.
“It is a completely voluntary way for people to select and elect to take their COLA out of the system and get a buyout,” he said.
The legislation passed out of the House by a 108-2 vote.
Zalewski said the legislation will continue a program that has provided some savings to the unfunded pension liability.
“This helped reduce the unfunded liability by doing something completely constitutional, this is a bill that we can all be proud of,” Zalewski said.
The bill was able to easily pass through the House and now waits to be heard in the Senate.
Last week, Tim Blair, director of the State Retirement System, told a Senate panel the funds have paid “2,158 retirees a little over $243 million as part of the [cost of living allocation] buyout program.”
The state borrowed to cover those costs, but Blair said it saves more than $300 million in liabilities.
The totals for a separate buyout program for inactive yet vested members was lower, paying out 86 members about $12.5 million.
For the Teachers’ Retirement System, which pays about $7.3 billion in benefits a year, Stan Rupnik said they’ve also had some buyouts.
“The automatic increase program, $328.6 million was paid out there and then the pension buyout, $218 million,” Rupnik told the committee Monday.
This article was originally posted on Illinois Houses passes $1 billion extension of pension buyout plan
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