Pension Overhaul in Illinois

The Illinois legislature approved a historic plan Tuesday to eliminate the state's $100 billion pension shortfall, with a vote that drew union threats of a court fight but that supporters said was key to repairing the state's deeply troubled finances.

After a Senate vote of 30-24, the House approved the plan, 62-53, sending it to Gov. Pat Quinn, who has said he will sign the measure. Officials say the overhaul will save $160 billion and erase the state's pension debt by 2044.

Public employee unions vowed quick legal action. They say

the legislation is unfair to workers and retirees who for years paid into the system but will now pay for others' mistakes.

Illinois' unfunded pension problem is considered the worst in the nation, primarily because lawmakers failed for decades to make the state's full payments to the funds.

The measure pushes back the retirement age for workers ages 45 and younger. The annual 3 percent cost-of-living increases for retirees would be replaced with a system that provides increases on a portion of benefits, based on how many years a beneficiary is in the job. Some workers would have the option of freezing their pension and starting a 401(k)-style plan.

As a carrot in exchange for the changes, public workers are to see their pension contributions fall by 1 percent. - APEndText