The unfunded portion of Illinois retired state and local employees’ pension and health care funds now stands at $110 billion. That total can be reduced by $50 billion without raising the state income tax, according to Jim Tobin, President of National Taxpayers United of Illinois (NTUI). In addition to the $11.5 billion the state will receive over the next 19 months from the federal government’s “stimulus” package, certain important measures can be taken to solve the predicament of the state´s unfunded liabilities.
“Requiring government employees to increase their contribution to the pension fund by 5 percentage points would reduce the unfunded liability by $20 billion. Additionally, government employees should be required to pay at least 3% of their payroll for retirement health benefits and at least $250/mo after retirement. Under current law they pay nothing for either and receive health, dental, vision and life insurance for themselves and their dependents after retirement. This very reasonable requirement would also save another $30 billion in unfunded health care liability. Note that $250/month is less than most Medicare recipients pay for much inferior coverage.”
“Additionally, if all new state hires are required to enter Social Security and save for their retirement with their own contributions to 401(k) programs, these new hires will not become part of the unfunded pension or unfunded health care problem.”