* Press release…
On Thursday, legislation to extend the successful “Batinick Buyout” program for state pensions was signed into law by Governor Pritzker. House Bill 4292 passed the House and Senate with bipartisan support and Rep. Mark Batinick (R-Plainfield) was a chief co-sponsor.
“I said back in 2018 when the Batinick Buyout first passed through the General Assembly that we had to make changes to our pension system if we were going to solve our long-term fiscal problems in Illinois,” said Rep. Batinick. “I am delighted to see this program extended after successful implementation that has saved the state over $1 billion on our unfunded pension liability. I look forward to seeing how much more we can save to finally overcome and move past our state’s longtime pension crisis.”
HB 4292 amends the General Obligation Bond Act and authorizes an additional $1 billion to State Pension Obligation Acceleration Bonds. These bonds make accelerated pension benefit payments and participants can receive these payments instead of pension benefits or for reductions in the increases to their annual retirement annuity and survivors’ annuity. This extension is now June 30th, 2026.
Rep. Batinick originally introduced this pension reform language in 2018, which closely resembled a plan he introduced in 2016 and 2017. At the time, he was the first person in the United States to propose such a concept in bill form. Rep. Batinick is also the House Republican Spokesperson for the Personnel & Pensions Committee.
* More…
“Responsible fiscal management means taking every action possible to address our pension obligations while honoring promises made to current and retired workers – promises made by governors and legislators on both sides of the aisle,” said Governor JB Pritzker. “The expansion of this bipartisan pension buyout program builds on Democrats’ work this session to save taxpayers nearly $2 billion in pension liabilities by paying down our pension debt in advance.”
“The COLA buyout program is a win-win for the state’s finances and our retirees,” said State Representative Bob Morgan (D-Highwood). “I’m proud of this bipartisan effort that frees up nearly $100 million in our Budget annually to address much-needed investments in education and human services.” […]
“When legislators of both parties can come together on a plan to save taxpayers money by reducing the state’s pension shortfall, this is an occasion to celebrate,” said Illinois State Comptroller Susana A. Mendoza. “This is yet another example – along with a billion dollars for the Rainy Day Fund and half-a-billion in additional pension payments – that show Illinois is saving, not spending, and earning credit upgrades.”
“The savings generated by the pension buyout program is big point of pride for me,” said Illinois Senator Robert Martwick (D-Chicago). “When this idea was formed by myself and Rep. Batinick, we put aside our different ideas on partisan issues, and worked together to find a bi-partisan solution for the state’s most persistent and crippling financial problem. When Democrats and Republicans work together on these core financial issues, every Illinoisan benefits.”
“This bill is part of a commonsense solution to help us meet our pension obligations and reduce our unfunded liability, and I’m glad to see it signed into law today. I hope Illinoisans see this as another sign that we are putting our state back on the path of fiscal responsibility and making real progress for our residents.” -State Representative Margaret Croke (D-Chicago).
“By providing an additional $1 billion of State Pension Obligation Acceleration Bonds, we’re reducing long-term pension liabilities and furthering our state’s commitment to fiscal responsibility,” said State Representative Sue Scherer (D-Decatur). “This is an important piece of legislation that not only benefits the state, but also benefits state employees who have more of an opportunity to receive accelerated pension benefits.”
State employees will now have the opportunity to opt for a pension buyout for an additional two years, through June 30, 2026. $1 billion in bond authorization was approved to fund these buyouts. Previously the buyouts were offered only through June of 2024.
- Shanna - Thursday, May 5, 22 @ 3:06 pm:
Cook County your turn
- Hieronymus - Thursday, May 5, 22 @ 3:09 pm:
Hmm. If they _really_ wanted to do something, bring back the exact same 5+5 buyout offer that they did in 2002.
You’d see plenty of Tier 1 folks jump on that.
- Big Dipper - Thursday, May 5, 22 @ 3:27 pm:
The thing about this is that it is almost always an unwise decision for the pension recipient so it preys on the financially unsophisticated who are lured by the lump sum now as opposed to receiving more over the long term. There are exceptions of course such as those who are terminally ill or who need the money for an emergency/unusual purpose but for the typical pensioner the taxpayers benefit at their expense.
- Joe Bidenopolous - Thursday, May 5, 22 @ 3:28 pm:
= bring back the exact same 5+5 buyout offer that they did in 2002.
You’d see plenty of Tier 1 folks jump on that.=
I’m sure they would. And our pension situation would probably get worse, as it did in 2002 when more than expected took the deal.
- Bigtwich - Thursday, May 5, 22 @ 3:34 pm:
Call ILL Cash Now.
But, who is going to dress up as the Viking?
- City Zen - Thursday, May 5, 22 @ 3:38 pm:
==You’d see plenty of Tier 1 folks jump on that==
In other words, a money loser for the state.
Besides, if there is indeed a teacher shortage, why would we let teachers retire sooner?
- Jibba - Thursday, May 5, 22 @ 3:39 pm:
===…almost always unwise…===
True for people with anticipated normal lifespan. I’d be interested to know why people took the buyout. Lack of financial knowledge? Poor health or limited expected lifespan? Might have a spouse who is also a retiree so a lump sum allows them to do something big or make an inheritable nest egg? Or just plain financial desperation to pay for bills, home, or college? I smell a poll…
- Hieronymus - Thursday, May 5, 22 @ 4:11 pm:
@Joe
I made that statement mostly tongue-in-cheek. I’d qualify and leave skid marks.
- Anonymous - Thursday, May 5, 22 @ 4:15 pm:
Make tier 2 great again
- Skeptic - Thursday, May 5, 22 @ 4:24 pm:
” be interested to know why people took the buyout.” A buddy of mine took the buyout because he felt he could get better than 3% return on the money on his own.
- Bogey Golfer - Thursday, May 5, 22 @ 4:27 pm:
The irony is the DJIA dropped over 1000 points today. All the talking heads on CNBC are pointing to a recession. So why would anyone take a buyout?
- Retired SURS Employee - Thursday, May 5, 22 @ 5:10 pm:
As noted above, a Tier 1 individual should think long and hard as to whether the buy-out would be a good deal. Individual investors cannot beat professional investors.
- Hieronymus - Thursday, May 5, 22 @ 5:14 pm:
… well, the state mostly _is_ counting on fools and money parting ways …
- 'lectric guitar - Thursday, May 5, 22 @ 5:16 pm:
Similar story to Skeptic’s comment, I had someone tell me that that they took the buyout, then invested it with the intent to eventually pass it on to their kids.
So there is a strategy there, but as others above have mentioned, you are at the mercy of the market.
- Tired teacher - Thursday, May 5, 22 @ 5:45 pm:
Big Dipper is spot on. This is almost always a bad idea for the person with a pension.
- RNUG - Thursday, May 5, 22 @ 8:37 pm:
Moat of you are on it. If it makes financial sense for the State, it DOES NOT make financial sense for most employees.
As noted, there may be a few exceptions, primarily those with a terminal illness not expected to live a normal life expectancy.
But here’s a cautionary tale of a friend. Given their family health history, they expected to have a heart attack by 45 and to be deceased by 55 - 60, so they didn’t save for retirement … other than the State pension they were required to contribute to. That person is now in their 70’s and, while they’ve had one cardiac issue, are fairly healthy. So you just never know …