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UPDATE: Senate Bill 1673

June 1, 2012



House Bill 1447, Amendment #2 is similar to Senate Bill 1673 and would require current employees and retirees to elect one of the two options detailed below (individuals hired on or after Jan. 1, 2011 are not impacted). However, only individuals in the General Assembly and State Employees Retirement Systems would be affected. Both houses of the General Assembly have passed the bill, but the House still needs to accept Senate Amendments 1, 2, and 3.


Senate Bill 1673 would implement major changes to the Illinois Pension Code, and would affect all state pension systems except for the Judges Retirement System. Under this proposed legislation, current employees and retirees would have to elect one of two options (individuals hired on or after Jan. 1, 2011 would not be affected).

Option 1: Accept a lower cost-of-living adjustment (reduced to 3% or 1/2 of the CPI, whichever is less, with no compounding), and keep access to retiree health care. Current employees who chose this option would have their future salary increases count towards their pension benefit. Under this choice, individuals are also allowed to join a newly created optional cash balance plan.

Option 2: Keep the current cost-of-living adjustment (3% compounded), and lose access to retiree health care. Under this choice, current employees future salary increases would not count towards their pension benefit. In other words, their pension would be based on their salary at the time of selecting this choice.

Many of the state retirement systems that would be affected by this legislation (TRS, SERS, SURS, and GARS) have information about it on their websites.

As of June 1, 2012, this legislation has not passed.

For coverage of the proposed pension reform legislation see:

"Pension legislation gets new life in General Assembly"--State Journal-Register

"Pension overhaul on track in Springfield"--The Chicago Tribune

"Pension-reform package moves to full Illinois House"--Chicago Sun-Times

"Pension-reform package collapses in Illinois House"--Chicago Sun-Times

"Legislators punt on pension reform but pass gambling expansion"--The Chicago Tribune

"Quinn says pension reforms must come soon"--State Journal-Register

"No House vote on pension plan; lawmakers to return soon"--State Journal-Register

"Ill. pension fix derailed; officials to try again" --Southtown Start

See also the National Association of State Retirement Administrators' June 2012, Issue Brief about COLAs.

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Frequently Asked Questions

Q: Why are some calling for Illinois to switch from a defined benefit to defined contribution system?

A. As of 2011, Illinois faces an unfunded pension liability that exceeds $80 billion, one of the largest in the nation. Calls have been made to switch Illinois from its current defined benefit system to a defined contribution system due to misunderstandings regarding the sources of this large debt and the effects of a system switch.

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