Deal Reached On University Pensions

A last-minute effort to stave off a rash of retirements at Illinois universities and community colleges is just one step from success. 

An association representing employees has reached an agreement with the attorney general to hold off implementing some of the state's pension overhaul.  

“What this should do is resolve any need for anybody to retire before June 1 of 2015. Which is to say that the rush of retirements that is going on right now because of people's fears, this should obviate," said Aaron Maduff, an attorney for the State Universities Annuitant's Association.

While public workers widely dislike (and question the legality of) the benefit cuts in the pension law,  Maduff said their situation is more difficult because of differences in the university pension system.

He said some of the changes in the 2013 pension overhaul would effectively force retirement this summer risk losing a lot of money -- in some cases, nearly $200,000. Maduff noted that the agreement should alleviate that concern.

"The core message is that if you were worried about retiring before the first of July, or for many people right now it's May 15 ... you don't need to worry that hanging around is going to leave you without certainty," he said. "You know, you can stay and you will get, at a minimum, what you would have gotten if you retired before July First of this year."

That’s contingent on a Sangamon County judge accepting the deal, which could happen this week.

Unions say the entire law is unconstitutional, in that it defies a clause in the state constitution that guarantees pension benefits cannot be diminished nor impaired. On Monday, they submitted a separate legal filing that seeks to put the entire pension law on hold until the Illinois Supreme Court decides whether to uphold the sweeping pension law.

Workers are being "forced to make life-altering decisions that can't be reversed," AFSCME spokesman Anders Lindall explained, "despite all the uncertainty of not knowing whether this bill will be upheld or struck down."

The SUAA request had also asked for a stay of the entire pension law, but instead of holding out for that or going through a protracted court battle, negotiated the deal with the attorney general. Those involved say time is of the essence in hopes of holding off a retirement wave they argue will harm the state's schools through a loss of institutional memory.  They say the State Universities Retirement System has been overburdened with members trying to understand how the pension law would affect their benefits, and without enough time to meet with each, people have been forced to make retirement decisions without the full scope of information.

The tentative agreement between the SUAA and the attorney general resolves problems stemming from what can be described as typo in the pension law affecting university workers' so-called "money purchase plans."  The SURS board recently voted to interpret the law as if the typo were fixed,  so as to not inadvertently further cut some university workers' pensions.

But the SUAA deal also goes beyond that by eliminating issues involving so-called "refunds" that would have meant some university employees would have taken big hits were they to stay on the school payrol. The original request for an injunction, filed May 2, cited a man who would lose $190,000 if he kept working rather than retire by July. 

The deal would also allow retirement systems to temporarily ignores a key provision of the pension law which reduces by one-percentage point how much employees must contribute toward their retirement; under the terms workers will continue paying what they do now, so as to not create additional harm if the law is found to be unconstitutional. There are additional changes, that affect individuals under systems besides SURS.

Any injunction on the pension law is expected to have a negligible affect on Illinois' finances this year, as lawmakers are not counting on its eventual, projected savings as they attempt to craft a budget for the 2015 Fiscal Year.

The General Assembly voted to reduce benefits for university employees', state workers' and public school teachers outside of Chicago in order to begin to climb out of Illinois' worst-in-the-nation pension debt.