IL HR0358

Public Act 96-0889 (2010) established a "Tier 2" pension plan for public employees hired on or after January 1, 2011 in the Teachers' Retirement System (TRS) and State Universities Retirement System (SURS).

Tier 2 plan dramatically reduced benefits compared to the original "Tier 1" plan and was estimated to save $64 billion in state taxpayer costs.

Tier 2 members do not participate in Social Security, and experts believe the reduced Tier 2 benefits do not provide comparable coverage to Social Security's Old-Age portion.

House urges TRS and SURS to obtain an Internal Revenue Service ruling confirming Tier 2 compliance with safe harbor provisions under Section 3121(b)(7)(F) of the Internal Revenue Code of 1986.

Requests TRS and SURS complete a detailed financial analysis of the Governor's proposal to move current Tier 1 members into Tier 2 before any such change is considered.