Illinois plans to split their retirement system
President Bush signs the Pension Protection Act in August, 2006.
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JEREMY HOBSON: In Illinois the public employee retirement system is considered the most under-funded in the country. And starting tomorrow, the state will effectively split the system in two.
From WUIS in Springfield, Illinois, Sean Crawford reports.
SEAN CRAWFORD: State lawmakers and Gov. Pat Quinn have approved a new two-tier pension system. That mean current workers' benefits will remain untouched. But state employees starting in 2001 will work longer to retire for less money. Illinois has a long history of failing to fully fund its pension system. And now the shortfall is threatening the state's ability to function. Mike Madigan is Speaker of the Illinois House.
MIKE MADIGAN: It's currently acting as an impediment to the ability of the state to borrow money for activities that we've all agreed to do.
The new pension system has angered public employee unions. They contend it was politicians who let the system get in such bad shape in the first place. At least right other states have tweaked their pension systems to save costs. Some state workers are required to chip in more for retirement accounts. Others have seen their cost of living increases reduced. Some unions have fought back with lawsuits.
In Springfield, Illinois, I'm Sean Crawford for Marketplace.