Sent: 2013-11-27
From: William L. Perry, President
To: Employees
Subject: Pension legislation update
Dear Colleagues,
As you know, pension reform has been an intensely debated topic in Springfield for over three years. It now appears that the General Assembly will reconvene on December 3rd with intentions of passing pension reform legislation. No bill has been filed and there is no guarantee that the special session will result in changes to the pension system, but I want to take the opportunity to share some information with you.
There are a number of changes that have apparently been discussed. Some of those include:
* Placing a cap on pensionable earnings that is aligned with the limit used for Social Security purposes;
* Changing the existing COLA from an annual 3% increase, compounded, to, for many, a much reduced "annual increase";
* Delays in eligibility for retirement for Tier 1 employees;
* Stronger legal language forcing the state to pay off the existing pension liability in 30 years and the creation of a pension stabilization fund;
* A 1% decrease in Tier I employee contributions; and,
* Changes to the effective rate of interest that would affect the money purchase formula.
At present there has been no bill filed. It is impossible to determine exactly what changes might be seen if a bill is filed. The Council of Public University Presidents and Chancellors, of which I am a member, supported a set of changes outlined by the Institute of Government and Public Affairs at the University of Illinois at Urbana-Champaign. It does not appear that this proposal will receive consideration by the General Assembly.
I am concerned about the latest changes proposed. A cap on pensionable income will have a deleterious effect on our ability to recruit and retain excellent faculty and staff. Changes to the COLA will have an immediate and lasting impact on our annuitants, a group of individuals who are also being asked to shoulder increased healthcare costs.
Very importantly, I am concerned about all of the faculty and staff members currently working at Eastern. As individuals you have borne the responsibility of contributing to your pensions. Decisions made in the past have destabilized state pension funds. Now it is very likely we will see changes to our benefits proposed in legislation.
I and other representatives from Eastern will remain engaged in this process. Although the legislative process is likely to proceed very quickly, we will do our best to keep you informed of developments.
Thank you for your continued commitment to Eastern and to our students.
Sincerely,
Bill Perry
President
