Legislative Update:
2nd Week of Veto Session adjourned Thursday November 10, 2011. Please note that the House will reconvene November 29, 2012 to consider pending legislation.
Pension Reform
SB512 (Cullerton, D-Chicago) — The bill came out of the House Personnel and Pensions committee with a 5-4. However, the bill was NOT called for a vote on the House floor. “Pension reform” is NOT dead. Please keep up the pressure on your lawmakers and tell them to vote NO on SB512. The CTU believes that SB512 would weaken the pension system by enabling some people to opt out of it, thereby decreasing its ability to pay for the retirement of other teachers. Those choosing a self-managed plan would see their retirement be affected by fluctuations in the market. SB512 creates 3 pension tiers.
Tier 1 Teachers’ contributions rise up from 9% to 12.75% of salary. This option is available only for those current employees hired prior to January 1, 2011.
Tier 2 Teachers will contribute 7% of their salary to the pension. Instead of calculating benefits based on the highest 4 years of service, it will be based on 8 years. Cost of living increases will be lowered, and the minimum retirement age will be 67. This option will be offered to all current employees.
Tier 3 is a self-managed plan (403b) and will only be available to employees with less than 5 years of service. Under this plan, employees will contribute a minimum of 6% of their salary, matched by a 6% employee contribution. Employees would control the investment and also assume the risk.
HB3827 (Cross, R-Oswego) — There was NO action on this bill. It was not heard in committee.
This bill would have eliminated the Chicago Teachers Pension Fund (CTPF) Board of Trustees as we know it. If passed, the bill would have given the Mayor of Chicago the power to appoint four members to a new pension board giving him majority control of it. The makeup of the “proposed board” will have 7 members: four members will be appointed by the mayor of Chicago and the remaining three members will be elected by the active members and retired members of the fund.
HB 3813 (Cross, R-Oswego) passed the Senate 50-0-1 and will be sent to the House for concurrence of the Senate amendments. CTU believes this piece of legislation is unconstitutional and it will be challenged in the courts.
HB3813 impacts the calculation of current participants in numerous retirement systems including CTPF. This legislation would freeze an individual’s salary earned while participating as an officer or employee of a statewide teacher union or organization from being used in the calculation of the individual’s pension.
