Pension systems for teachers, state employees and university faculty need about $250 million more a year from Illinois taxpayers to avoid violating federal tax laws.
That's the conclusion of a study recently commissioned by the Illinois General Assembly's Commission on Government Forecasting and Accountability that analyzed whether Tier 2 pension benefits in those systems meet federal "safe harbor" requirements necessary to forgo Social Security tax payments.
The study, done by Chicago-based human resources and benefits consulting firm Segal, showed an earnings cap placed on some future state pensioners was lower than the federal cap for Social Security recipients. That makes pensions less valuable than Social Security for some future retirees, which violates federal tax law.
"Employees of state and local governments are provided an exemption (of paying Social Security taxes) if the employee participates in a retirement system that provides benefits that are comparable or better than the benefits provided through the old-age portion of Social Security," the report states.
The suggested fix is an infusion of $5.6 billion into the Illinois Teachers' Retirement System, State Employees' Retirement System of Illinois and State Universities Retirement System of Illinois over the next 22 years, according to the report.
"Failure to meet safe harbor is you get sued by the employees, and the remedy is that we as the employer have to pay retroactive Social Security benefits," said...
The United States alleges that from September 2015 through December 2020, St. Michael’s Eye & Laser Institute (St. Michael’s) and Dr. Michaelos caused the submission of false claims for transc...