Pension committee divided on plans

Published 10/15 2013 03:56PM

Updated 10/15 2013 05:24PM

SPRINGFIELD -- Some lawmakers on the state's special pension committee are floating a new idea to fill the $100 billion funding gap. But, it could leave state workers and teachers with less money when it comes time to retire. WCIA-3's Ashley Michels keeps us Connected to the Capitol.

It's just an idea right now, but they're looking at adding an option for retirees to do a 401K-style plan. The state would save money, but it could spell trouble for people who have nothing else to fall back on.

For more than a year now, Governor Quinn has made it his top priority. The state needs to fix the way public pensions work. Otherwise, Illinois will be headed for financial ruin.

"Folks in Detroit are finding out right now when you don't straighten out the pension system, you end up with ten cents on the dollar."

But, the ten-member special pension committee tasked with finding the solution is at a standstill. Five members back a plan to cut the cost of living adjustments, but also asks workers to contribute less from their paychecks.

The other five want something else. One option they're looking into now is putting teachers and state workers on a 401K-style plan where it's set in stone how much you pay in, and what you get back depends on how well the investment does over time.

"State employees aren't professionals at investing their money."

That's why Representative Raymond Poe (R) and others worry it could hurt some retirees down the road. If markets don't do as well as expected, there will be less in the bank at the end of the day.

"We found a lot of states that tried that to go totally to a 401K, ended up having to go back to the defined benefit. Their money actually grew a lot faster when they went through the state who invests money on a regular basis."

It takes six members of the special committee to move a plan forward. If they get to a point where they can't agree on one plan to go with, ten more lawmakers will take their place and start all over.

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