Illinois lawmakers are again considering proposals that would allow some participants in state government’s pension systems to take a lump-sum payout in lieu of regular annuity payments.
Buyout plans are part of pension discussions in both the House and Senate, all of which are in preliminary stages. But Rep. Robert Martwick, D-Chicago, chairman of the House Personnel and Pensions Committee, thinks the ideas have merit.
“I’m a fan of the buyout,” Martwick said of various House proposals. “I think those are truly what would be constitutional because they amount to a true free consideration.”
In other words, he said, participation in them is voluntary and there is a “tangible benefit” for those who partake. […]
Under Batinick’s proposal, a participant’s payout is based on the net present value of a person’s pension. That means the amount of money the pension system needs now to cover a person’s estimated retirement benefit, assuming that amount will grow over the years. Anyone thinking of participating in the buyout would have to get a calculation of the net present value from the appropriate pension system. The amount would be reduced by a certain percentage as a condition of getting the buyout.