The Illinois General Assembly sent pension reform legislation to Governor Pat Quinn in March in an effort to stabilize the state’s hemorrhaging pension fund and prop up the state budget. Governor Quinn expects the reforms to save $300 million in the coming year and “billions more in the years to come.”

House Bill 1946 applies only to state workers hired after January 1, 2011, creating a two-tier benefit system. The bill increases the retirement age to 67 for workers with 10 years of service. Workers who have at least 10 years of service may retire at age 62 with reduced benefits. It also limits annual increases in payouts to 3 percent or half the rate of inflation, whichever is less, and sets a cap on the amount of benefits one worker can receive.

The state’s public pension fund is underfunded by some $62.4 billion, making it the least solvent fund in the nation. As a result, the state’s bond rating was downgraded in the past year, a fact that helped to spur swift passage of the legislation.

“In this historical fiscal crisis, we must act responsibly,” Illinois Senator Donne Trotter (D) said. “These savings will help protect and stabilize our pension systems and relieve budget pressures in the future.”

Governor Quinn said he would sign the legislation, calling it “an important and vital step toward rescuing Illinois from fiscal calamity.”

Reaction. State Representative Jim Durkin (R) called the bill “less than perfect” but said that it was “the only option” presented to the Legislature.

Illinois Senator Dale Righter (R) said that he “wasn’t happy” about the bill, noting that it allows Chicago schools to defer payments to the fund for 3 years and increases cost of living allowances for legislators and judges. “We need reform that makes all the necessary changes, just not some changes,” Righter said. “While this bill does make meaningful changes to the state pension system, it does it in the same old way by raiding pensions to fill our budget gaps.”