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Bill Brady Unveils Pension Savings Plan
From Illinois Radio Network
The Republican candidate for governor is proposing a measure to save the state money on its pension costs.
State Sen. Bill Brady (R-Bloomington) proposes putting new state employees in a 401(k)-type plan, instead of a traditional pension plan. He says the state would contribute 6.2 percent of salaries to Social Security, but would not make an employer contribution to the 401(k).
Many private-sector employers make a contribution of 3-6 percent of their workers' wages to their 401(k) plans, but Brady says the state has generous pension benefits because politicians have used them as a way to buy the affections of state workers at elections, and he believes an employer contribution from the state would be as tempting.
Brady estimates current pension costs at 25 percent of state workers' pay, but that includes the debts resulting for the state not making payments into pension funds over the decades, and having to catch up and pay interest. The normal costs are about 9 percent. The Social Security contribution, which the state does not pay now but would have to pay under the Brady scenario, is 6.2 percent.
SOURCE: Illinois Radio Network via WGIL Radio
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