A group of Illinois university professors and administrators has released a plan to reform the retirement system for university employees.
An Institute of Government and Public Affairs proposal released Monday recommends letting workers trade a portion of their guaranteed benefits for a lump-sum payment which would go into a self-managed retirement account.
“Consideration of a fair set of alternatives for participants along with strategies to reduce pension system liabilities are important components of the reform measures we suggest,” says NIU vice president Steve Cunningham, who is among the report’s authors.
The report, titled “A time to act on the State Universities Retirement System,” posits that offering the lump sum payments to participants would help cut Illinois’ $96 billion unfunded pension liability.
It also recommends ending the tax exemption on retirement income and warns that shifting the full cost of pensions to universities could lead to tuition increases.
The authors note that nothing is as important as the state paying off the current unfunded pension liabilities and guaranteeing that future payments will be made on time going forward.
“The uncertainty about the long-term security of the state’s pension system is putting the economic engine powered by its universities at risk of stalling,” says co-author Avijit Ghosh, a professor of business at the University of Illinois at Urbana-Champaign.