New pension buyout plans passed for the coming fiscal year

Workers will have more options when it comes to their pension plan. (Pixabay)

 

By Illinois Radio Network

SPRINGFIELD – Illinois state pensioners looking to get more control of their retirement will soon have that option with several pension buyout plans passed by the legislature and enacted by the governor for the coming fiscal year.

One option lawmakers say will generate $380 million in savings would give Tier I members a lump sum buyout to trade their 3 percent yearly increases with 1.5 percent. Another plan lawmakers say will help save $40 million is a buyout state Rep. Mark Batinick said is for eligible members that aren’t old enough to retire or have moved on to another job.

“They might get a small annuity down the road and they can trade that in for a lump sum that they can roll into a 403(b), which is similar to a 401(k), and invest it how they see fit,” Batinick said.

Wealth management advisor John Bever said defined contributions, like an IRA, gives the beneficiary more control, even when they pass away.

“So it’s legacy money in that it goes onto the next generation,” Bever said. “Even if they don’t name a beneficiary, that money is part of their estate and will be distributed according to their will.”

A third part of pension savings lawmakers approved would change the cap for what the state will cover for salary increases at the end of a worker’s career, a practice known as spiking. The cap goes from 6 percent to 3 percent, so any employer like a local school district would be responsible for the pension contributions required from the salary spiking of more than 3 percent. That’s expected to bring about $22 million in savings.

While calling the overall spending plan last week as bad for taxpayers, state Rep. David McSweeney, R-Barrington Hills, said lawmakers should have taken a different approach to reform pensions.

“We need to do a constitutional amendment like Arizona that’s a negotiated settlement that addresses the fact that we have a 3 percent annual increase of benefits,” McSweeney said. “We have a $130 billion pension liability. That’s using a 7 percent rate of return. If you use a real rate of return, we have a $200 billion problem. We are insolvent.”

Blogs

Labor Day – Expanding voting rights for all

By Mike Matejka Because of COVID, there is no Labor Day Parade this year.  It’s always a great event for our everyday workers to march proudly down the street and enjoys the festive crowd. If there had been a parade, this year’s Labor Day theme was to be “150 years of struggle: your right to vote.” …

Is federal mobilization the answer?

By Mike Matejka As President Donald Trump threatens to send federal marshals into Chicago, over the objections of Illinois Governor J.B. Pritzker, recall another Illinois Governor who protested the incursion of armed federal personnel into the city.   Those federal troops, rather than calming, escalated the situation, leading to deaths and violence. Illinois poet Vachel Lindsay…

In these troubled times, to my fellow white Americans

By Mike Matejka Our nation is at a unique watershed in human relations. African-Americans have been killed too many times in the past before George Floyd, but the response to this man’s death is international and all-encompassing. I was a grade-schooler during the Civil Rights 1960s. I watched Birmingham demonstrators hosed and the Selma – Montgomery…

Workers’ Memorial Day – Remember those whose job took their life

Looking around our community, when we say employer, most will respond to State Farm, Country, or Illinois State University.   We too often forget those who are building our roads, serving our food, or our public employees. COVID-19 has made us more aware of the risk.  Going to work every day for some people means…