Ill. Treasurer: Pension battle belongs in court

SPRINGFIELD — Illinois should create a second, lower-cost retirement plan for government employees, even if it triggers a legal battle, state Treasurer Dan Rutherford said Tuesday.

The Republican said current employees should have a choice between the existing plan, which guarantees certain retirement benefits, and a new 401(k)-style investment plan. He said offering a new option would not run afoul of the state constitution, which bars cutting retiree benefits.

"It should be litigated. For years and years, we've been, 'Oh, it's unconstitutional.' Litigate it," Rutherford said at a news conference. "Because until we do it, nobody is going to really know."

A major union said the idea wouldn't raise the same "constitutional red flags" as simply reducing benefits. Some government employees, such as university officials, already have that pension choice, said a spokesman for the American Federation of State, County and Municipal Employees.

But spokesman Anders Lindall said AFSCME opposes Rutherford's proposal. He said it wouldn't fix the state's pension problems — particularly state government's failure to contribute its full share of retirement costs over the years.

The gap between pension's long-term costs and their current assets is about $79 billion.

"It was politicians for the last many years — a time that Dan Rutherford was in the state Senate — who failed to pay what the state owes," Lindall said.

Government pensions face intense scrutiny as Illinois struggles with massive budget deficits. Critics say the pension systems are too generous and should be scaled back. Already, the state has taken steps to cut benefits to future employees.

Rutherford joined the list of people who want changes that also apply to people already on government payrolls.

House Speaker Michael Madigan, D-Chicago, has called for steps in that direction. The top Republican in the House, Minority Leader Tom Cross, proposed something similar to Rutherford's proposal.

Cross would give public employees the option of switching to a 401(k)-style plan or staying on the current plan but contributing more money. AFSCME considers the higher employee contributions an unconstitutional cut in benefits.

Gov. Pat Quinn and Senate President John Cullerton, both Chicago Democrats, say the state would almost certainly violate the constitution by changing benefits for employees already enrolled in the state's five pension programs.

Lindall said several other states have given employees a choice but have seen "very low" participation in 401(k)-style plans.

Many people oppose them because it requires employees to bear greater risk. Employees invest their own money in hopes of generating a greater return. Employers do not have to match those investments.