The Illinois General Assembly will likely consider pension reform legislation in 2024. The House Personnel and Pensions Committee has held a series of subject matter hearings throughout the summer and fall to hear from various stakeholders. Tier 2 benefits will need to be increased to meet federal safe harbor, and legislators are using this as an opportunity to consider more comprehensive reforms. Democrats would prefer to pass a pension reform omnibus, with all reforms together in the same bill. Republicans would prefer to pass each reform as an individual bill, allowing them to oppose certain aspects and support others.
On September 28, the Committee heard from police departments, fire departments, and municipalities. Many of the police and fire departments and their respective unions called for a complete elimination of Tier 2 for public safety positions. They claim that the inherent dangers of public safety positions demand a Tier 1 pension, and without it, they are facing recruitment and retention struggles. While Tier 2 benefits need to be increased, complete elimination of Tier 2 will not happen given the drastic impact it would have on state budgets. Illinois already contributes over $10B to pensions yearly, representing around 20% of its $50B annual budget. Eliminating Tier 2, even just for public safety positions, would drastically increase the amount the state and taxpayers need to spend on pensions without providing new revenue sources. The Illinois Municipal League, representing municipal employers, raised this point at the hearing despite being given much less time to testify than representatives of public safety employers.
The House Personnel and Pensions Committee will continue to hear from stakeholders throughout the year, and pension reform legislation will likely be considered in the 2024 regular session. The next hearing to discuss this subject has yet to be scheduled.
