by Ted Dabrowski, John Klingner
Illinois Policy Institute
December 04, 2013
Illinois’ five state-run pension funds are more than $100 billion in debt, according to official state numbers. Without major reforms, the funds are headed toward insolvency – and that means retirees may see their pensions cut and younger workers may not have a pension at all. One of the biggest forces behind this growing debt is the cost-of-living-adjustments, or COLAs, which retirees of the five state-run retirement systems receive annually. In Illinois, COLAs increase state employees’ yearly pensions by an automatic 3 percent annually, driving up the costs of pensions every year. Opponents of pension reform argue that COLAs are needed to protect the purchasing power of career public workers with small pensions. But these COLAs increase the pensions of all of the state’s 200,000 retirees annually – not just career workers with small pensions. By blocking reforms, opponents of COLA reform threaten the solvency of Illinois’ pension system.