Dive Brief:
- A glitch in a rushed pension law passed in December means that Illinois state university employees could face large cuts in retirement benefits if they don’t retire before July 1.
- Waiting until after July 1 could cost university employees $200 to $500 per month, for life, depending on their years of experience and retirement contributions.
- University officials are pushing for legislators to fix the problem before they face an "exodus" of hundreds or even thousands of professors and other employees, reports The News-Gazette.
Dive Insight:
The News Gazette quotes a university system spokesman as saying that “people are queued up like homesteaders for the Oklahoma land rush” for a potential “brain rush out the front door.” The new pension law has a provision that changes the guaranteed return on investment that retirees with a certain type of annuity would earn: a market rate based on the 30-year U.S. Treasury as of July 1, 2014, plus 0.75%, instead of 7.75%. Legislators added a floor so benefits wouldn’t be cut too low, but they used the wrong “as of” date. The University of Illinois has about 5,700 employees eligible for retirement on its three campuses, ad 60% are affected by the pension law glitch.