Illinois General Assembly Passes Pension Reform Bill


Both chambers of the Illinois General Assembly adopted the Conference Committee Report to Senate Bill 1 on December 3, 2013. The bill provides comprehensive pension reform for four state retirement systems – the Teachers’ Retirement System (TRS), the State Universities Retirement System (SURS), the State Employees Retirement System (SERS) and the General Assembly Retirement System (GARS). Governor Pat Quinn is expected to sign the bill.

The major highlights of the bill for all four systems are as follows:

  • Active Tier I member contributions will decrease by 1%.
  • Tier I members will have their pensionable earnings capped at the greater of: (a) the Tier II salary cap (currently $110,631); (b) the member’s annualized salary on the date the law takes effect; or (c) if the member is covered by an employment contract or collective bargaining agreement on the effective date of the law, the member’s annualized salary on the day that contract or collective bargaining agreement expires.
  • Retirement ages are increased for Tier I members who are younger than age 46 at the time the law takes effect.
  • Tier I retiree COLA increases are reduced for both current and future retirees, and are reduced to 0% in staggered years for employees who retire on or after July 1, 2014.
  • An optional defined contribution plan is provided for up to 5% of active Tier I members. The election to participate in the defined contribution plan is voluntary, and is made on a first-come first-served basis. Members who elect to participate in the defined contribution plan will have their defined benefit pension frozen as of the date they begin participation in the defined contribution plan.
  • Employers and unions are not obligated to bargain the impact of the pension reform changes in the law.

The bill passed by a simple majority vote, and therefore it is expected to go into effect on June 1, 2014 even if it is signed by the Governor immediately (though many provisions of the bill are not effective until July 1, 2014 or later). Full details regarding the bill’s provisions can be found at the TRS website

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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