(The Center Square) – Illinois’ budget has $75 million set aside in what Gov. J.B. Pritzker calls a “fix” for Tier 2 public employee pensions. A Republican state legislator says it’s “kicking the can down the road.”
Illinois’ pension debt is among the worst in the country with $140 billion in unfunded liability for the state’s five pension funds. Signing the fiscal year 2026 state budget, Pritzker said the plan addresses concerns over the retirement of those hired after 2011.
“This budget addresses the Tier 2 pension Social Security safe harbor fix which will now begin in FY 26,” Pritzker said. “With this fix going into effect, we’re protecting our taxpayer and state workers from future shortfalls that could cost the state much more.”
The IRS “safe harbor” standards require pensions to be an adequate replacement for Social Security benefits. Many Illinois state workers do not qualify for Social Security benefits – or pay for them – because of the pension systems.
State Rep. Steven Reick, R-Woodstock, said the taxpayer’s money set aside in the budget is not a real fix.
“This money that was put in there this year is nothing more than a short-term stopgap measure to compensate those people who are running afoul of safe harbor,” Reick told The Center Square.
How many people are currently being impacted wasn’t revealed during recent legislative hearings. One Teachers Retirement System official told legislators it is reasonable to assume that they will have members impacted and that will be in the relatively short term future.
Reick said the state’s underfunded pensions are so massive, he doesn’t expect it to be solved within his lifetime. One fix to increase benefits Reick said came with an “astronomical” taxpayer cost.
“We’re just again kicking the can down the road,” Reick said. “It’s going to happen somewhere along the line, the bottom is truly going to fall out on this thing and there’s nothing we’re going to be able to do about it.”
Reick worried there isn’t a real fix in sight for the mounting pension problems for Illinois, with one exception.
“We amend the constitution to do away with the pension guarantee, I realize that’s political death for anybody who would support something like that, but frankly speaking, I don’t see any other way out of this.”
Tier 2 pensions were created in 2011, lowering the amount of benefits for those retiring from the public sector.
