HR0752 99TH GENERAL ASSEMBLY

HR0752 LRB099 13953 GRL 38288 r

HOUSE RESOLUTION

WHEREAS, According to the Commission on Government Forecasting and Accountability (COGFA), based upon the actuarial value of assets, the total unfunded pension liabilities of the State retirement systems totaled $111.2 billion on June 30, 2014; and

WHEREAS, COGFA has also indicated that between Fiscal Year 2001 and Fiscal Year 2014, the combined unfunded liabilities of the retirement systems increased by $86.2 billion based upon the market value of assets; and

WHEREAS, The certified contribution to the 5 State-funded retirement systems has increased from $1.33 billion in Fiscal Year 2001 to $7.6 billion in Fiscal Year 2016; and

WHEREAS, The Illinois Supreme Court made a unanimous ruling on SB 1 (Public Act 98-599), which found that pension benefits are a contractual and constitutionally protected right that cannot be diminished or impaired; and

WHEREAS, Regardless of the Illinois Supreme Court ruling, the effects of increased pension payments and liabilities are still serious problems, which are currently crowding out spending on other essential State services, and represent problems that must be addressed in a constitutional way; and

WHEREAS, The Illinois Supreme Court's opinion laid a framework for the adjustment of benefits through a legal approach called "consideration", which allows for the adjustment of benefits if both parties agree to the changes; and

WHEREAS, The General Assembly has not thoroughly broached the possibility of a pension or partial pension exchange option for participants in State-funded retirement systems, which would consist of giving participants a lump sum payment for their annuity or a portion of their annuity, as a viable solution to addressing short and long-term savings; and

WHEREAS, Many of those nearing retirement may be attracted to having more control over their retirement assets, but unfortunately the State does not provide a versatile and competitive alternative to the current pension arrangement; and

WHEREAS, Providing a lump sum payment in exchange for all or a portion of an annuity would provide a voluntary, constitutional approach to addressing the State's pension obligations, while simultaneously providing participants the options and flexibility needed when planning for retirement; therefore, be it

RESOLVED, BY THE HOUSE OF REPRESENTATIVES OF THE NINETY-NINTH GENERAL ASSEMBLY OF THE STATE OF ILLINOIS, that we urge the Speaker of the House of Representatives and the Chairperson of the House Personnel and Pensions Committee to hold a series of hearings on how the State could potentially approach a lump sum exchange option; and be it further

RESOLVED, That the Committee invite interested parties and stakeholders to these hearings in hopes of better understanding the positive and negative outcomes of an exchange proposal as well as any potential barriers that would prevent an exchange option from becoming a common practice within our State-funded retirement systems.