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We Are One Illinois Coalition Responds to New Report Showing Path Forward to Fix Broken Tier 2 Pensions
SPRINGFIELD, IL – Yesterday, the Illinois Economic Policy Institute released a new report documenting the urgent need to fix Illinois’ woefully inadequate Tier 2 pension system. The report highlights the many ways Tier 2 has damaged public sector employment, creating shortages of teachers, firefighters, and state and local government employees who deliver critical services across the state. Tier 2 is also widely believed to be in violation of federal law, exposing state and local governments to a potentially devastating lawsuit.
The ILEPI report analyzed several potential fixes to Tier 2 pensions, including SB1937, proposed by We Are One Illinois. According to the report, “Tier 2 pension reforms could be funded without increasing income taxes, corporate taxes, or sales taxes. The reforms can be paid for almost entirely by repurposing legacy debt.” The report concludes that SB1937 “would be credit-neutral for the State of Illinois, would incentivize more highly qualified people to seek out and remain in the public sector, and would enhance economic activity by nearly $600 million annually.”
We Are One Illinois spokesperson Pat Devaney responded to the report:
“Tier 2 employees — the dedicated public workers who keep our state moving — have been shortchanged for too long. They do the same work as their Tier 1 colleagues, but retire on a lesser pension that doesn't provide an adequate retirement. This new report is further evidence of what public employee unions have been saying for years: Tier 2 is broken, but we can make significant strides toward fixing it without requiring tax increases or hurting the state budget.
“The We Are One coalition’s bill, SB1937, would make dramatic progress to fix Tier 2 by improving the final average salary calculation, lowering retirement ages, strengthening the cost-of-living adjustment, and resolving the so-called ‘safe harbor’ problem that the federal government could use against our pension system at any moment. This bill will strengthen the finances of our pension systems and help bolster public services without requiring new taxes. It is the right thing to do.
“Our members have made their voices heard with more than 100,000 calls and emails to lawmakers over the past two years. We understand that the federal funding cuts coming out of Washington are creating real anxiety among state lawmakers about Illinois's budget picture. But we also know that the Tier 2 problem does not get easier the longer it goes unaddressed, and the safe harbor risk does not disappear because Springfield is nervous.
“We are continuing to meet with legislators, answering their questions, and making the case that this bill is the fiscally sound, fair solution Illinois needs. We will not stop and we will not back down.
“The We Are One Illinois coalition — representing hundreds of thousands of working people across this state — has fought for this for years and will keep fighting for as long as it takes.”
BACKGROUND:
SB1937 makes a number of improvements, including:
- Improving the Tier 2 final average salary calculation to the average of the highest 6 of an employee’s final 10 years on the job.
- Lowering the Tier 2 retirement age to age 62 if the employee has maxed out their pension, 65 with 20 years of service, or 67 with 10 years of service.
- Improving the Tier 2 cost-of-living adjustment to 3% simple interest per year.
- Adjusting the Tier 2 pension salary cap to match the Social Security Wage Base, addressing the so-called “safe harbor” problem.
- Reforming the pension funding ramp to reach 90% funding by 2045 and 100% funding by 2049.
For more information about We Are One Illinois or the fight to fix Tier 2, visit www.fixtier2.com.
The We Are One Illinois coalition includes the Illinois AFL-CIO, AFSCME Council 31, Associated Firefighters of Illinois, Illinois Education Association, Illinois Federation of Teachers, FOP Labor Council, Laborers, Metropolitan Alliance of Police, Illinois Nurses Association, Police Benevolent and Protective Association, SEIU, Teamsters, Illinois State Troopers, and more.
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