Experts say lawmakers continue to underpay the state’s five federal retirement systems, even though they account for 20% of the state’s general fund, totaling $11.6 billion. Stated.
Pension expenditure is the largest item. state budgetaccounting for nearly $10.5 billion, This represents 20% of the state’s general fund budget and nearly $11.6 billion in total state funding.
Illinois’ pension contributions are far below what actuaries have determined is needed to begin paying the state’s pensions. $142 billion Pension Liability – The difference between the amount available to the state and the amount ultimately required to be paid to the state’s retirees. According to the Illinois General Assembly’s Committee on Government Forecasting and Accountability, total fund payments in 2025 are more than $4.5 billion short of actuarially determined contributions.
Pritzker also proposed adding three years to the state’s current funding plan and increasing the funding goal from 90% to 100%.
Mr. Pritzker is right to aim for 100% funding to strengthen the nation’s pension system. But his proposal ignores Illinois’ inadequate pension contributions on an actuarial basis. In other words, it fails to meet real-world needs as defined by experts.
The state funding plan will not contribute more than current actuarially determined contribution levels until 2039, but the amount will rise each year if the state fails to make adequate payments. Fiscal year 2023 actuarially determined contributions were less than $14.9 billion, more than $1.1 billion less than today’s actuarially determined contributions.
Additionally, Pritzker’s budget proposal emphasizes the need to reevaluate Tier 2 pensions to determine whether they comply with federal law. Illinois’ pension system must provide benefits equal to or greater than Social Security benefits in order for the state to continue to avoid paying into Social Security on behalf of employees.
There is a certain upper limit to pension pay within Tier 2. Under Given Social Security’s wage base, it is increasingly likely that Tier 2 pensions will eventually violate these rules, known as safe harbor provisions. If that happens, Tier 2 pension benefits would have to be increased to comply with federal law, which would add yet-to-be-determined obligations to the state’s pension system and further complicate Illinois’ funding plans. This will be a measure to
