Judge rules Illinois pension reform law is unconstitutional
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A Sangamon County, Illinois, Circuit Court judge ruled Friday that Illinois’ pension reform law passed last year is unconstitutional.
Judge John Belz sided with employee and retiree organizations that argued that the law, passed Dec. 3, 2013, violates the state’s constitutional clause that pension benefits “shall not be diminished or impaired.”
The state is expected to appeal Judge Belz’s decision to the Illinois Supreme Court.
The law decreases cost-of-living adjustments, caps pensionable salaries and raises retirement ages. It also decreases employee contributions by one percentage point, creates a defined contribution plan for a portion of employees and gives the five state retirement systems authority to sue the state to compel it to make required pension contributions.
The law had been slated to go into effect June 1, but was put on hold by Judge Belz to determine its legality.
“We welcomed the opportunity to make our case that the Illinois Constitution means what it says, and the pension clause is absolute,” said Sean Smoot, principal for one of the plaintiffs, We Are One Illinois, in an e-mailed statement. “Our unions have long argued that the state cannot simply choose to violate the Constitution and diminish or impair retirement benefits if politicians find these commitments inconvenient to keep.”
Spokesmen for Gov. Pat Quinn and Attorney General Lisa Madigan argued that the pension law, aimed at saving $160 billion over the next 30 years, was urgently needed to resolve the state’s $100 billion pension funding crisis.
Meaghan Kilroy writes for Pensions & Investments, a sister publication of Business Insurance.
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