Before the Illinois General Assembly adjourns for the summer, lawmakers should pass Senate Bill 1012, a bill that gives state workers an escape from Illinois’ flailing pension system.
State Sen. Dale Righter, R-Mattoon, is the sponsor of the bill, which would do two things: First, it would put all new hires into a 401(k)-style retirement plan. Second, it would allow state government workers to voluntarily leave the pension system and join the 401(k)-style plan that currently is only available to state university workers.
“This bill simply expands access to a retirement system thousands and thousands of university workers have already been participating in for 20 years,” said Ted Dabrowski, the Illinois Policy Institute’s lead pension expert and vice president of policy. “It opens up the 401(k)-style option to all state workers. This retirement plan is constitutional. Better yet, we know it works – and that people like it.”
Righter’s bill would enroll all state employees hired after July 1, 2018, in a 401(k)-style retirement plan instead of the state’s pension system, which is grossly underfunded and on the brink of insolvency. For the past two decades in Illinois, employees in the State Universities Retirement System have had the option to enroll in a self-managed retirement plan. Righter’s legislation would open up this retirement savings option to all current state workers.
“Every state worker in Illinois should have the opportunity to join the 401(k)-style plan, not just those who work in the state’s higher education system,” Dabrowski said. “Workers in 401(k)-style plans control their own retirements and aren’t reliant on the promises of politicians. These accounts are portable, and employees can take their retirement savings with them to any job.”
Righter’s bill would build on legislation from 1998, which gave university workers an alternative to the traditional pension plan. Since then, more than 20,000 university workers have chosen not to join the state’s pension system.
These plans have widespread support from likely Illinois voters. In a recent poll of registered Illinois voters, 78 percent favored giving state workers the option to leave the pension system and enroll in a 401(k)-style retirement savings plan.
To watch Ted explain the solution to Illinois’ pension crisis: https://www.youtube.com/watch?v=c-UroqKLBIY