New law consolidates 649 downstate and suburban police and fire pension plans into two statewide funds
information provided by the Office of the Governor
CHICAGO, Ill. (December 18, 2019) – After more than 70 years of failed attempts to remedy the patchwork of first responder pension plans across the state, Governor JB Pritzker signed a new law today to consolidate the 649 downstate and suburban plans into two statewide funds.
“Bipartisanship in this General Assembly has achieved what none of their predecessors have been able to do: consolidate the 650 downstate and suburban pension funds to just two, amplifying their investment power and reducing the burden on property taxpayers,” said Governor JB Pritzker. “Working together, we are helping hundreds of cities in Illinois alleviate their spiraling property tax burdens, and just as importantly, we’re showing that Illinois can tackle its most intractable problems.”
The new funds will leverage their collective buying power of $15 billion in assets—$8.7 billion in the police fund and $6.3 in the fire fund—to increase investment returns and lower management costs. Helping lower the pressure on local property taxes, the consolidation is estimated to produce greater returns of $820 million to $2.5 billion over the next five years alone and billions more over the next 20 years.
Created by Gov. Pritzker less than a month into office, the Illinois Pension Consolidation Feasibility Task Force recommended the legislation after months of deliberation.
Senate Bill 1300 passed in the fall veto session with strong bipartisan majorities and the support of the Associated Fire Fighters of Illinois, the Illinois Fraternal Order of Police, the Illinois Municipal League, and the countless cities, towns, and villages across the state they represent.
Local pension boards will continue to administer pension benefits, and no assets or liabilities will be shifted from one local pension plan to another. The new law also brings Tier 2 pensions into compliance to avoid future additional liabilities, which is estimated to cost $70 to $95 million while projected investment gains can generate an additional $820 million to $2.5 billion.
Senate Bill 1300 takes effect immediately.