Illinois pension funds are scrambling to come up with the funds for their employees’ pensions after the state lost a federal appeals court decision to allow state workers to make contributions to their pensions.
Illinois’ retirement funds, which include both public and private employers, have been grappling with how to deal with the massive pension shortfall the state faces as a result of the financial crisis.
The Illinois Supreme Court’s decision last week allowed the state’s public employers to contribute up to a total of $5,700 to their employees retirement funds.
That’s $3,300 per employee per year.
That amounts to $6,200 per employee annually.
The $5.6 billion shortfall for public employees has led to the state and federal governments pledging nearly $3.2 billion in relief to the states public workers.
The funds, meanwhile, have come up short on money to cover retiree health care costs, which are estimated to be $4.2 trillion.
But the money that states are asking for is the difference between what the states pension funds need to cover retirement costs and what they have to pay their public employees.
Illustrating the difficulty, the state is asking $3 billion for the $5 billion shortfall.
The money is divided among public employers, public employees, private employers and private employees’ retirement plans.
For public employers it is about $1.2 million per employee.
For private employers it’s about $826,000.
For the retirement plans, it’s $2.5 million.
Illustration by Alex BrandonIllinois pensioners are going to be asking for $3B.
For public employers and the public plans, they’re asking for a lot less.
Illis pension funds have been working overtime trying to figure out how to pay retirees in the future.
It’s unclear when they might receive that money.
And Illinois’ public employees’ plans don’t have enough money to absorb those contributions.
Illistrations by Alex Brandy and Chris McLeodIllinois officials are asking state employees to make up the difference, and they want them to do it in one lump sum.
That would mean that Illinois’ retirees would have to contribute $521.1 million to their 401(k) plans.
The state’s private employer pension plans have also been struggling to come to an agreement.
A spokesperson for Illinois Pension Services said that they are working with private employers to try to resolve their differences.
But that could take years, if at all, and it could lead to a big jump in the cost of pensions.
The private employers plan would be the biggest contributor to the Illinois pension fund, with a contribution of $4 billion.
The public employers plan is next, with $1 billion.
Illissippi Public Employees Retirement System has been working hard on finding a solution to the pension shortfall.
A spokesman for the agency told WBEZ that they had talked to private employers who have offered to make payments, but that it was a “sparse” proposal.
The spokesman said that the state has also asked private employers for contributions.
They were willing to make some payments, and then they were negotiating over what would be owed.
We’ll know more on Monday, when the pension fund says it will release the amount of its contributions to the public employers.