Jhancock Pension Law Is Just Another In A Long Line Of Pensions Legislation to Push For New Jobs
It’s hard to imagine a more controversial piece of legislation in recent memory than the Jh Hancock Pension Law, a sweeping bill that would force state pension funds to contribute a percentage of their revenues to the state pension fund.
While the measure has faced fierce criticism from state legislators and the private sector, it was championed by former Gov.
Rod Blagojevich (R) and has become a key piece of Illinois pension legislation.
Under the bill, if the Illinois Pension System failed to reach its goal of covering all retirees by 2024, the state would have to raise taxes on millions of Illinoisans.
While some lawmakers have tried to argue that the bill is necessary to help the state’s already strained pension fund, Blagojevich argued that it is not necessary and that the state should focus on fixing the problem of the aging baby boomer population.
“We have the opportunity to make some very, very important investments in this state, but it’s not appropriate to put our retirement savings at risk,” Blagojaevich said.
“That’s not a sound strategy for us to take.”
In an op-ed published by the Chicago Tribune, Blaqevich wrote that “Pension reform, like any other reform, is a balance-of-payments issue.”
“If we don’t address the growing inequality in our state, we will continue to face challenges that will impact our state’s competitiveness in the long run,” Blaq evi wrote.
“Paying for the pensions of our workers and the cost of maintaining those pensions is not a question of whether it’s a good idea to put some money into the pension fund but rather what the pension system needs to do to get its act together.”
While Blagoevich’s assertion that the pension funds are “under siege” is certainly true, the idea of taxing the money that states invest in the retirement system seems to have a bit of a different ring to it.
According to data from the Pension Benefit Guaranty Corporation, the pension plans of state employees and public sector workers have grown steadily over the past three decades, and the projected shortfall has increased to an estimated $3.7 trillion by 2025.
That’s more than double the projected $3 trillion shortfall from 2026 to 2028.
In other words, the federal government’s $2.3 trillion annual spending for retirement benefits has made Illinois the third-most generous in the nation.
And according to the most recent numbers from the Pew Charitable Trusts, there are currently about 7 million people living in retirement who are unable to work.
As Blagovich pointed out, it’s time to put those numbers into context.
Illinois is currently one of just two states, the other being Oregon, where workers are eligible for a 401(k) but the system doesn’t provide workers with an income.
While a state that spends a whopping $2 trillion on pensions is no small feat, it is still a fairly modest amount when compared to the projected growth of the retirement age in the U.S. If the state were to expand its pension system, it would be the first state to do so since the 1940s, when the state of New York passed legislation to extend its public pension plans.
In addition to providing a significant boost to the retirement income of workers, the JHancock pension bill would also give the state a much needed cushion in times of economic hardship.
“If you were to take out a large amount of money from the pension, it can be a pretty painful thing,” says Jim Gorman, an assistant professor of economics at the University of Illinois at Chicago.
“And you can be fairly confident that there will be some costs to that in the short run.”
Even without the pension tax, Illinois is still one of the wealthiest states in the country.
The state is projected to generate more than $6.5 trillion in tax revenue in 2024, according to a new report from the state.
That number includes nearly $1.7 billion in tax collections from payroll taxes, which is a major reason why the state is among the wealthiest in the United States.
According the report, the average Illinois taxpayer will pay $8,600 in federal income tax in 2024 compared to $3,600 for an average household in the rest of the country, which means the average taxpayer in Illinois would pay $1,500 more in taxes than the average household on the whole.
“The state is not going to be able to pay for everything it has done,” says Gorman.
“But if you put a lot of money into retirement, the future will look much brighter.”
The bill has faced criticism from Illinois state lawmakers as well as from a number of other public officials, but Blagojievich is optimistic that it will pass.
“We’re going to get there,” he said.