32.4 F
Naperville
Friday, March 29, 2024

Naperville’s Pulse in Springfield – Can police and fire pensions be consolidated?

-

In a recent survey of the 41st House District, 72 percent of the respondents listed high taxes and the need for pension reform as the most important issues facing our state. These results weren’t a surprise; they affirm my belief that bold action is needed to reform pensions, which directly affect the amount of taxes people pay. But pension reform will not happen in one fell swoop. True reform is much more likely to occur through small, incremental steps.

Today Illinois has 649 different suburban and downstate police and fire pension systems. That’s 649 systems – each with a governing board and an administrator. That’s a lot of overhead. And because most of the funds are small, investment opportunities are limited and rates of return are, on average, two percentage points less than larger state pension funds that serve greater numbers of public employees.

I am supportive of a recent recommendation that the General Assembly take action to consolidate these police and fire pension systems. This would eliminate duplicative administrative costs and allow the systems’ investment assets to be combined to provide for better investment opportunities and higher returns.

The proposal would reduce the 649 plans down to two – one for police and another for firefighters. While assets would be combined to maximize investment opportunities, each police and fire department would retain its own line item so that funds were not intermingled for purposes of disbursement. A board split equally between employees and employers would manage both funds, and each would be held in independent trusts, separate from the State Treasury.

In a recent report, the State’s Pension Consolidation Feasibility Task Force suggested that each day the police and fire pension funds remain separate, they collectively forfeit close to $1 million in potential investment returns. Task force members also said that through economies of scale, consolidating these pension funds could save Illinois taxpayers between $820 million and $2.5 billion over the next five years. That is meaningful relief for taxpayers.

If enacted, the consolidated police and fire pension systems would operate much like the Illinois Municipal Retirement Fund (IMRF), the healthiest of the state’s pension systems. IMRF serves more than 429,000 members across 3,000 units of local government.

The plan does not address the $134 billion in unfunded liabilities in statewide retirement systems for teachers, university employees, state workers, legislators or judges, or Chicago’s $30 billion in unfunded liabilities across the City’s four funds. But it is a great starting point for incremental pension reform.

Lawmakers are expected to consider the proposal during veto session.

Stay Connected!

Get the latest local headlines delivered to your inbox each morning.
SUBSCRIBE
- Advertisement -
Grant Wehrli
Grant Wehrli
Grant Wehrli is a lifelong Naperville Resident and former Representative in the Illinois House of Representatives and Naperville City Councilman.

LATEST NEWS

DON’T MISS OUT!
GET THE DAILY
SQUARE-SCOOP
The latest local headlines delivered
to your inbox each morning.
SUBSCRIBE
Give it a try, you can unsubscribe anytime.
close-link

Stay Connected!

Get the latest local headlines delivered to your inbox each morning.
SUBSCRIBE
close-link