State of Illinois Capital Markets Presentation
Taxable Series of April 2019A - Pension Acceleration Bonds
Pension Acceleration Program Overview
P.A. 100-587, which became effective on June 4, 2018, established two programs permitting eligible members of the State
retirement systems, until June 30, 2021, to forego certain benefits to which they are entitled under the Pension Code in
exchange for a payment from the State.
The Pension Buyout Program: Eligible members of SERS, TRS and SURS who have terminated service may forfeit all
rights to future benefit payments in exchange for an accelerated pension benefit payment equal to 60% of the present
value of the pension benefit to which the member is entitled.
The AAI Reduction Program: At the time of retirement, eligible Tier 1 members of SERS, TRS and SURS may forfeit
the 3%, compounded automatic annual increase ("AAI") in exchange for (i) a 1.5% non-compounded AAI and (ii) an
accelerated pension benefit payment from the State equal to 70% of the difference in the present value of such AAIS.
The accelerated pension benefit payments will be funded using proceeds from the issuance of State Pension Obligation
Acceleration Bonds pursuant to Section 7.7 of the GO Bond Act. $1 Billion of the Section 7.7 Bonds have been authorized
for issuance.
The State expects that the Programs, taken independently of other factors, will cause a reduction in the UAAL of the
retirement systems. However, the State is currently unable to quantify the amount or timing of any such reduction.
The current status of Pension Acceleration Programs can be found on page E-33 of the
Preliminary Official Statement.
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