The Illinois General Assembly approved a wide-ranging pension reform bill Tuesday aimed at saving $160 billion over the next 30 years and bringing the state-administered plans to 100% funding by 2045.

The Senate passed the measure 30-24 with three abstentions; the House approved it 62-53 with one abstention. Illinois Gov. Pat Quinn is expected to sign the legislation.

The bill is similar to one passed by the House but rejected by the Senate this summer. It decreases cost-of-living adjustments, caps pensionable salaries and raises retirement ages, but actually decreases employee contributions by 1 percentage point.

Also, up to 5% of employees hired before Jan. 1, 2011, will be eligible to join a defined contribution plan starting July 1, 2015; the plan will be revenue neutral for the state, and employee contributions will remain at the same level. DC investment options will include investments handled by the $13.1 billion Illinois State Board of Investment, Chicago. The employer contribution will be a uniform percentage of compensation that is determined each year. If a member joins the DC plan, pension accruals will be frozen.

COLAs will change to 3% noncompounding on $1,000 a year per year of service or $800 for those retirees who receive Social Security, from a straight 3% compounding rate for both types of retirees. The $1,000 or $800 figure will increase annually based on the rate of inflation. Salaries eligible for a pension will be capped at $110,000, and that cap would grow at the lesser of 3% or half of the inflation rate. The retirement age will increase for participants 45 years old and younger. It will rise four months for each year a member is under 46, capped at five additional years.

In order to reach 100% funding, the state will contribute $364 million in fiscal year 2019 and $1 billion annually through 2045. Also, starting in fiscal year 2016, the state will contribute an additional 10% of the annual savings from pension reform. The retirement systems, but not individual participants, may file suit in the Illinois Supreme Court to compel the state to make the required contributions.

Kevin Olsen writes for Pensions & Investments, a sister publication of Business Insurance.