For the past 75 years, Illinois has failed to make sufficient contributions to its Teachers Retirement System. As a result, TRS has a massive unfunded liability.
That's one reason the state keeps creating new retirement plans. The latest, called Tier 3, combines a traditional pension system with a 401k-style account.
TRS spokesman Dave Urbanek says it will give new teachers a choice.
"As soon as Tier 3 is implemented, all new TRS members will be in Tier 3. And then they will have an option to become Tier 2 members if they wish... At the same time, all existing Tier 2 members will be able to switch to Tier 3."
Tier 3 can't be implemented until all seven state retirement systems agree on how to proceed, and get that plan approved by the IRS.
The state will kick in 2 percent for Tier 3 teachers ... for a couple years. But beginning in fiscal year 20-21, that cost shifts to local school districts.
