Why Illinois pension fund officials say they need a new bailout plan
Delaware’s pension fund is bracing for a new round of debt relief and raises, but the governor said Tuesday that the state will need a plan that also includes a long-term solution to its pension obligations.
The Illinois State Employees Retirement System is currently underfunded by about $1 billion, a shortfall that has led to its debt servicing costs mounting faster than anticipated.
The $1.3 billion pension plan is on track to have an annual deficit of about $3 billion by 2021, according to the state’s Fiscal Affairs Commission.
The state is already dealing with $7 billion in retiree healthcare costs.
The new plan will cover about $2 billion of that.
John Carney said that the new plan, which would be unveiled in coming weeks, will include a plan to increase the state pension’s contribution to a fixed amount.
That would be roughly $600 million annually, he said.
“The governor and I are working hard to figure out a new plan that will address this issue,” Carney said.
“The question is whether it’s going to be as simple as we think it is, and that is, if we can make sure we have a plan with a long term solution.”
Delaware is one of just a handful of states with a pension fund that hasn’t been able to meet its pension debt obligations.
Most have either faced bankruptcy or gone bankrupt in recent years.
The retirement system has a $1 trillion pension liability and has been facing financial pressure since the end of 2016.