Act Now: Protect Pension Reforms, Protect Taxpayers

Illinois lawmakers are considering Senate Bill 1937, legislation that would roll back Tier 2 pension reforms for all pension systems, including police, fire, and the Illinois Municipal Retirement Fund (IMRF). Unions and bill sponsors are pushing to advance this costly bill during the fall veto session.

Most people are familiar with 401(k) retirement plans, where the employer and employee contribute a set amount to an account, and retirement income depends on contributions and investment returns. Municipal pensions work differently. Like Social Security, they are defined benefit programs that guarantee a set monthly retirement payment based on earnings and years of service.

Municipal employees do their part: police contribute 9.91%, firefighters 9.455%, and all other municipal employees 4.5% of their paychecks toward their pensions. Local taxpayers fund the balance through municipal contributions, which cover both the normal cost of benefits and the system’s unfunded liabilities.

Investment returns also play a critical role. In a 401(k), if investments underperform, the account balance shrinks. In municipal pensions, when investments underperform, taxpayers must pay more to keep benefits guaranteed. In 2024, municipalities contributed 4.96% of payroll to IMRF to cover normal costs. By comparison, public safety pensions require municipalities to contribute well over 10% of payroll—far higher than the average 401(k) employer match of 4.6%. On top of that, most communities pay even more to climb out of long-standing pension debt.

It’s important to remember: these pensions are not funded by the State of Illinois—they are funded by your local tax dollars.

As the Veto Session approaches, municipal leaders play a vital role in protecting taxpayers and communities from costly pension benefit changes. We encourage you to share this issue with your residents and urge them to contact their legislators using the resources available at Invest in Communities.

Together, we can make sure lawmakers understand the real-world impact these proposals would have on local budgets, services, and taxpayers.