Read the legislative synopsis and find a link to the entire bill here.

Pension 101 -- Pension Coal In our Holiday Stockings!
An E-Mail Newsletter for Retired and Active Teachers Concerned with the Preservation of Our Pensions (Please forward)………

Representative Elaine Nekritz gave every retired teacher and most definitely every active teacher -- pension coal in our Holiday stockings!

Representative Nekritz working with Representative Daniel Biss -- came up with House Bill 6258 supposedly "Pension Reform" -- unfortunately it is "Non-Reform" masquerading as true pension reform. Because it was the only pension bill in written public form ( Speaker Madigan's pension bill and the Governor's "pension plan" are conceptual and not in bill form yet) it did garner 20 house supporters (Co-Sponsors)! HB 6258 is gaining ground, gaining steam, gaining momentum - among the "we must do something, even if it is the wrong thing" crowd.

    Below I lay out two straight forward synopsis of HB6258. They are objective summaries. In the next Pension 101 I will begin to outline why I think HB6258 is a "Pension Killer"!
        Please write your (email, call, visit) legislator. TODAY!

        Please forward Pension 101 to every teacher you know.

        Please call your Regional IEA Office and reserve a seat on the January 3rd and 4th for the "Rally for Our Pensions" buses. Not sure where your IEA office is? Write haisman!

    Highlights of 6258 from IEA Government Affairs :

    The pension proposal introduced this week by a number of rank-and-file legislators still needs to make its way through the legislative process. The overview below explains the proposal and how it would affect members of the Teachers' Retirement System (TRS) and the State Universities Retirement System (SURS). The bill includes teachers, state employees, higher education employees and members of the legislature. IMRF was not included in this piece of legislation. However, those that participate in IMRF must know that any benefit reduction legislation that passes for the state pension systems will certainly be applied to IMRF soon after it passes. The constitutionality of many parts of this bill is in question.

    HB 6258(Nekritz, D-Northbrook)

    Cost-of-Living Adjustment (COLA) changes:

        Changes would apply to active and already retired members.
        The COLA would be payable only when a retiree has reached age 67 or after five years of retirement, whichever comes first. This provision applies to current retirees. Currently, members can receive their 3 percent compounded COLA upon reaching age 61.
        A new COLA equal to the lesser of $750 or 3 percent of the annuity. The COLA for most members in TRS and SURS would become an annual $750.
        Current retirees would have their annuities frozen to meet the criteria of the second dot point and they would have their COLA reduced to the amount specified in dot point number three.

    Changes for actives only:

        The age for retirement eligibility would change as follows:
        Members older than 46 would see no change.
        Members between 40-45 would have to work an additional year.
        Members 35-39 would have to work three additional years.
        Members younger than 34 would have to work five more years.
            The age of a member on the day the legislation takes effect would be used to determine how these new requirements would be applied.
                Pension contribution increase: Members would pay 1 percent more of their salary toward their pension the first year and 2 percent the second year.
                Pensionable salary cap: The legislation would cap pensionable salary to the Social Security Wage Base ($113,700 for calendar year 2013) or the member's salary on the day the legislation takes effect.

    Changes for members in Tier Two:

        There would be a Cash Balance Plan implemented for future hires. Current Tier Two members would have the option to participate in the cash balance plan.
            The cash balance plan applies interest to the retirement contributions by and for members. The balance of the contributions grow at a variable interest rate and a portion is annuitized when the member retires. The retirement system is responsible for investing the contributions by and for the member.

    The proposal would shift the cost of downstate and suburban teachers and higher education staff pensions from the state to local schools, universities and community colleges. This proposal is phased in over a number of years. However, many schools already face severe budget cuts which limit educational opportunities for students. This cost-shift would drain millions of dollars from these downstate and suburban educational institutions.

    New pension funding plan:

        The proposal creates a new revenue to fund the pension systems by using money freed up from bond payments to pay down the pension debt.
        Pension funding would be considered a constitutionally-protected benefit under this proposal.

    HOUSE BILL 6258
    TRS Summary -- DOT POINTS
    December 5, 2012

    · A new comprehensive pension reform proposal, House Bill 6258, was introduced in the GeneralAssembly on December 5 by Rep. Elaine Nektitz, D-Northbrook and Rep. Daniel Biss, D-Evanston that seeks to stabilize TRS finances and eliminate the System’s unfunded liability in 30 years.   
    Specifics for TRS members:
>> For all active and retired Tier I members (service before January 1, 2011)
    o The annual 3 percent COLA would apply only to the first $25,000 of a pension.  Currently, the average TRS pension is $48,216. Under current law, with the COLA that pension grows to $49,662 in the second year and $51,152 in the third year. In this proposal, with a capped COLA, the same pension would grow to $48,966 in the second year and $49,716 in the third year.
    o Members would not receive a COLA until age 67 or five years after they retire, whichever comes first. This would apply to all retired members already receiving a COLA under the old rules. These members could see their COLA suspended for a period of time.
    o The retirement age would be set on a sliding scale based on the member’s age and the time the law takes effect:
         46 and older: Retire at 55 with 20 years of service and receive a reduced benefit, or at 60 and receive a full benefit
         40 to 45 years old: Retire at 56 for a reduced benefit and 61 for full benefits.
         35 to 39 years old: Retire at 58 for a reduced benefit and 63 for full benefits.
         34 and younger: Retire at 60 for a reduced benefit and 65 for full benefits.§
    o The salary used to determine an active member’s final average salary would be capped atthe maximum Social Security wage base ($113,700 in 2013) or, for a union employee, at the member’s salary at the time the law takes effect.
    o Active member contributions would increase from 9.4 percent to 10.4 percent in 2014 and increase to 12.4 percent in 2015.
>> For all Tier II members (service after January 1, 2011)
    o Members would have the option of staying with the existing Tier II benefit structure or switching to a “cash balance” plan, which is a hybrid between a defined benefit plan and a defined contribution plan.
    Here’s how a cash balance plan works: TRS members and school districts would continue to pay an annual contribution and TRS would annually credit investment earnings of between 4 percent and 10 percent to each member.
    While the contributions and investment earnings of all “cash balance members” would be co-mingled for investment purposes, each “cash balance” member would have an individual notional account on file with TRS that would be comprised of their individual contributions, school district contributions and investment income.
    Upon retirement, TRS would calculate a guaranteed life-time annuity based solely on the money credited to each member’s account and adjusted for estimated future investment earnings and the member’s anticipated lifespan in retirement. The annuity continues even after money in the member’s account is exhausted.
    o All new TRS members that begin service after the law takes effect will automatically been rolled in the cash balance plan.
    For all school districts:·
    o School districts would be responsible, beginning in 2014, for paying an increased share of the annual costs of TRS pensions and the state would pay less toward these costs.
    Eventually, school districts would be responsible for paying the entire annual cost of benefits being earned every year. In FY 2013, the annual cost of TRS pensions is approximately $900 million.
    o Starting in 2014, the share of the annual cost paid by local school districts would increase by 0.5 percent each year until the total annual pension cost is paid by the districts.
    For state· government:
    o If the state does not pay its annual contribution to TRS within a set period of time, TRScould go to court to force the state to pay the contribution in the same way that the Illinois Municipal Retirement Fund can force local governments to pay their contributions.
    o The law is designed to make TRS 100 percent funded in 30 years.
    o Once the outstanding pension obligation bonds are paid off, the money being used to retire that debt will be dedicated to paying off the TRS unfunded liability until that liability is retired, instead of funding the annual cost of pensions. In fiscal year 2013, the amount of TRS funds dedicated to paying off the bond debt is $347 million.
    Rich Frankenfeld
    TRS Director of Outreach
    2815 W. Washington St .
    PO Box 19253
    Springfield, IL 62794-9253

Please write your (email, call, visit) legislator. TODAY!

    Please forward Pension 101 to every teacher you know.

    Please call your Regional IEA Office and reserve a seat on the January 3rd and 4th for the "Rally for Our Pensions" buses. Not sure where your IEA office is? Write haisman - his E-Mail is being sent to you by Bob Haisman. Pension 101 is an occasional E-Mail Newsletter concerning the crisis involving teacher pensions in Illinois! Pension 101 is put out by Bob Haisman (gardenoprf@sbcglobal.net). Much of the material concerns IEA's fighting for our pensions BUT Pension 101 is NOT AN OFFICIAL newsletter of the IEA! Bob Haisman is 100% responsible for what is in this E-Mail. Bob does not speak for the IEA!
Questions? Concerns ? Bob Haisman - gardenoprf@sbcglobal.net --
Bob is a retired teacher from Hinsdale High School . Bob was IEA President from 1993 to 1999. He retired from Hinsdale in 2001.
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