Last week, Governor Quinn signed a law resolving Illinois’ pension reform crisis. The new Senate Bill 1 was sponsored by Senator Kwame Raoul (D-Chicago) and Speaker Michael Madigan (D-Chicago).

“This is a major step forward in putting Illinois on the path to financial recovery,” Senate Leader Christine Radogno said. “It is the result of bipartisan, bicameral negotiations, after a great deal of debate…It will demonstrate to the credit rating agencies and job creators that we are serious about turning Illinois around.”

Within the new law, pensionable salary will now be capped at the greater of the Tier 2 salary cap ($109,971 for 2013), the employee’s current salary, or the employee’s salary at the end of an existing collective bargaining agreement. The cap will increase over time, based on the consumer price index (CPI).

There will also be graduated increases in retirement age based on the age of the employee, with a maximum increase of five years. The bill also creates an optional 401(k)-style defined contribution plan that will be available for up to 5 percent of Tier 1 employees. Senate Bill 1 goes into effect on June 1, 2014.

Yet the new legislation received much backlash. We Are One Illinois, a coalition of union representatives, released a statement criticizing Senate Bill1’s on impact workers and their retirement plans.

“Unions representing hundreds of thousands of public employees and retirees were not included in the leaders’ talks. If their new plan is in line with what’s been reported from earlier discussions, then it’s an unfair, unconstitutional scheme that undermines retirement security.”