Planning Past Pensions
Evidence of state and local government dysfunction surfaces in many areas. One is the operation of employee pension plans. Free from the strictures of Employment Retirement Income Security Act, some governments failed adequately to fund their pension promises and with the imminent retirement of the baby boom generation, are facing what appear to be insurmountable pension debts. The state of Illinois is one of the worst-hit states, with grossly underfunded pension plans, a state constitutional prohibition on reducing pension benefits, and a sizeable non-pension related budget deficit. Recently passed pension “reforms” likely will be struck down by its courts. There are no easy solutions to its pension woes, but this article seeks to lay out a few steps that Illinois can take now, under current law, and suggests more long-term policy and legal changes that it should consider for the future. Ultimately, though, the same dysfunctions that led to the current crisis might make these suggestions impractical.