SPRINGFIELD, Ill. (KMOX/IRN) – A report commissioned by the Teachers Retirement System has found the proposed pension overhaul could actually cost tens of billions of dollars over the next 30 years, instead of saving that much.
The Teachers’ Retirement System has found a flaw with a contentious proposal to change current state employee benefits, which could come up for a vote this week.
The measure would have employees wishing to keep their Tier 1 insurance benefits paying 4 percent more of their paychecks, with Tier II and Tier III employees receiving less benefits or being put into a 401(k) style program, respectively.
TRS spokesman Dave Urbanek says under the current pension funding formula, workers paying more into the system would get a bigger payout upon retirement. But he says an amendment has been filed to fix that.
They would be eliminating the one calculation that allows people to base their pensions on the amount of money they’ve accumulated during their careers,” he says.
Urbanek says the state could end up shelling out an additional $62 billion over the next 30 years if the proposal passes as is.
The differences in the two formulas allow some people who have a lot of time or who have contributed a lot to the system over a length of time to get a bigger pension,” he says.
(KMOX © Copyright 2011 CBS Radio Inc.)