Who would have the power to switch Illinois public employees from a defined benefit to defined contribution system?
A. There can be no DC plan as a substitute for a DB plan without action by the General Assembly. Under the Illinois Constitution (Article 13, Section 5) no current employee participating in a DB Plan could be forced to join a DC plan. Only new hires. A current employee could be offered the opportunity to switch to a DC plan on a voluntary basis, pursuant to a change in the Pension Code. For example, when SURS instituted their DC plans, incumbents could elect to join those plans on a voluntary basis. The amendment to the Pension Code provided a provision where a “balance” from the DB plan was calculated and moved over to the DC plan. That “balance” included both actual employee contributions and assumed employer contributions. There was a window period to make the switch. A second tier of (lower) benefits could be legislated for new hires, it could be DC or DB (or both!) that also would be up to the General Assembly. The Illinois Retirement Security Initiative is a project of the Center
Related Questions
- Wouldn’t it be cheaper for the employers if new public employees were required to enroll in a defined contribution plan?
- Who would have the power to switch Illinois public employees from a defined benefit to defined contribution system?
- What exactly is the role of a taxpayer in funding a defined benefit plan for public employees?
