< The 2014 Pension 40: The Battle Is On

Republican Bruce Rauner, the victor over Democratic incumbent Pat Quinn in the recent Illinois gubernatorial race, may regret he ever wished to win elective office. Rauner, onetime chairman of Chicago private equity firm GTCR, has had no real profile on retirement policy but finds himself staring at what may be the most serious pension mess among the states. As of June 30, 2014, Illinois’s pension debt had reached $111 billion; Moody’s Investors Service reported in September that the state’s three-year average pension liability over revenue was 258 percent, five times the median percentage for all 50 states. In 2013, Quinn persuaded the legislature to pass a bill raising the retirement age and cutting cost-of-living increases for beneficiaries. But the Illinois constitution holds that pensions cannot be “diminished,” and a coalition of public employee unions sued. And on November 21, Sangamon County Circuit Judge John Belz found the law unconstitutional, declaring, “Protection against the diminishment or impairment of pension benefits is absolute and without exception.” Depending on various appeals, Rauner, 57, could try to implement his campaign agenda for pensions, which includes capping the current program and shifting members to a defined contribution plan — though he has begun to talk of just shifting new employees to avoid legal problems. Rauner has said he’d seek to keep benefits from rising faster than inflation and would eliminate employees’ ability to receive large pay hikes before retirement to beef up their pensions. The odds of pushing these reforms through a Democratic-controlled state senate remain long, made worse by allegations that Rauner (and separately, Chicago mayor Rahm Emanuel [No. 4]) accepted contributions from executives affiliated with firms that manage Illinois pension plans. Rauner has not publicly responded to the allegations.

 
The 2014 Pension 40

1	2	3	4	5
Bruce Rauner Illinois	John and Laura Arnold Laura and John Arnold Foundation	Randi Weingarten American Federation of Teachers	Rahm Emanuel Chicago	David Boies Boies, Schiller & Flexner
6	7	8	9	10
Randy DeFrehn National Coordinating Committee for Multiemployer Plans	Damon Silvers AFL-CIO	Laurence Fink BlackRock	Chris Christie New Jersey	Robin Diamonte United Technologies Corp.
11	12	13	14	15
Ted Eliopoulos California Public Employees’ Retirement System	John Kline Minnesota	J. Mark Iwry U.S. Treasury Department	Gina Raimondo Rhode Island	Phyllis Borzi U.S. Labor Department
16	17	18	19	20
Orrin Hatch Utah	Abigail Johnson Fidelity Investments	Ted Wheeler Oregon	Caitlin Long Morgan Stanley	James Hoffa International Brotherhood of Teamsters
21	22	23	24	25
Amy Kessler Prudential Financial	Alejandro García Padilla Puerto Rico	Christopher Klein U.S. Bankruptcy Court for the Eastern District of Caifornia	Steven Rhodes Bankruptcy Court for the Eastern District of Michigan	Kevin de León California
26	27	28	29	30
David Draine Pew Charitable Trusts	Jordan Marks National Public Pension Coalition	Sam Liccardo California	Joshua Rauh Stanford Graduate School of Business	Karen Ferguson and Karen Friedman Pension Rights Center
31	32	33	34	35
Timothy Blake Moody’s Investors Service	Kathleen Kennedy Townsend Center for Retirement Initiatives, Georgetown University	Edward (Ted) Siedle Benchmark Financial Services	Daniel Loeb Third Point	Judy Mares Employee Benefits Security Administration, U.S. Labor Department
36	37	38	39	40
Andrew Biggs American Enterprise Institute	Andy Stern Columbia University	Kenneth Mehlman KKR & Co.	Teresa Ghilarducci New School for Social Research	A. Melissa Moye U.S. Treasury Department