New Guide: Illinois Pension Reform is Possible
The American Legislative Exchange Council Center For State Fiscal Reform’s latest publication, Keeping the Promise: State Solutions for Government Pension Reform, offers a solution-based perspective that should be valuable even for high-tax and higher-debt Illinois in its search for Illinois pension reform.
Illinois pensions face a liability of at least $97 billion, with some estimates much higher. Gov. Pat Quinn has gone so far as to deny paychecks to the state legislature in attempt to put a more immediate cost on inaction. The governor’s office projected the defined-benefit liability will grow by $5 million per day, an improvement over last year’s $17 million per day, but still a staggering figure for the employees who have been promised an Illinois pension and the taxpayers that will ultimately finance it.
Despite this dire situation, Illinois pensions will still benefit from the reasoned, free market solutions found in Keeping the Promise. Among them are:
- Move new hires to a defined-contribution plan like those in the private sector.
- Share risks as well as rewards with employees by letting them choose their investment strategy.
- Eliminate loopholes like pension spiking and double dipping.
- Be honest with taxpayers and bondholders by assuming reasonable rates of returns and employee retirement behavior, and
- End accounting gimmicks that confuse or obscure the financial reality.
Illinois’ pension crisis is well known, but so are the positive solutions that will remedy the problem to the benefit of both the employees that work to earn competitive retirement benefits, and the taxpayers that finance those benefits. For more information on reforms that stabilize retirement funds and protect taxpayers, or to see more solutions for Illinois pension reform, please download your free copy of Keeping the Promise: State Solutions for Government Pension Reform at www.alec.org.