While the Pennsylvania General Assembly is holding hearings to assess our public pension crisis is really bad, or really-really bad, Illinois is acting to reduce state pension benefits for new hires. The new Illinois package would set age 67 as the minimum for full retirement benefits, sets a maximum salary for calculation pensions. The savings were estimate to be over $100 billion “over several decades.” Steve Stanek of the Heartland Institute offers a brief commentary on the subject, though admitting Illinois’ reforms likely to not go far enough – like creating a defined-contribution plan that would not be subject to political manipulation.
This follows closely on the heels of New Jersey enacting a state pension overhaul – reducing benefits for new hires, and putting new part-time employees into a 401(k) plan.
At yesterday’s joint Republican Policy Committees Hearing in Harrisburg yesterday, some potential reforms were discussed. One of these was eliminating the option for state and school employees to take a lump sum payment upon retirement – which 90% of retirees do at a cost to the system. A spokesman poo-poohed this reform as saving only 1% of payroll.
While that is only a fraction of the dramatic increase expected in our pension costs, it will amounts to about $200 million between the two systems, which is not chump change.