Illinois Approves Major Pension OverhaulThe Paralegal Resource
December 11, 2013 — 989 views
The state of Illinois has recently approved a piece of legislation that will reduce the pension benefits of most workers in the state. These include firemen, nurses and teachers. The retirement age will also be increased. The move has been criticized by many and is likely to be challenged in court.
In recent years, the state of Illinois has been facing financial trouble. The state is suffering from a shortfall that is around 100 billion dollars. There was no way thought up for the state to raise that much money. To balance the budget, the state legislated to reduce the pension benefits of most workers in the state.
The legislation could go into effect next year, but before that it might go through court. Many workers are planning to challenge the legislation in court.
The Reduction in Pension
Under the legislation, only those workers who have worked the longest time, more than 40 years will have their pensions intact. The rest will have their pensions cut by up to 10 percent. The retirement age has also been increased by nearly 10 years. As a result, most workers will have to work late in their career to qualify for pension.
It has been clarified that those who have already started receiving their pension will see no reduction in it. There is going to be no retroactive reduction for those who have already retired with pension.
The impact of the legislation will be felt almost immediately. Many workers who were depending on their pensions will now have to depend on their savings. For many workers, the savings might not be sufficient to last through their retirement.
The impact is going to be worse for younger workers than for the older workers. Younger workers will see a larger reduction in their pensions than the older workers. The younger workers will also have more years of work to do than their older counterparts who have already gone through their many years of work.
The bill has been criticized by many varied groups. The people whose pensions have been reduced have obviously criticized it. In addition, many economists have called the legislation ineffective and a knee jerk reaction. Many experts have questioned the legal validity and constitutionality of the bill. For this reason, some groups are planning to challenge the bill in court. The court case could last for several months and will establish whether the state can go ahead with the bill or not.