Illinois Supreme Court Rejects Challenge to Pension Consolidation Act
Pursuant to P.A. 101-610, the Illinois General Assembly consolidated local police and firefighter pension fund assets into two statewide pension investment funds, one for police and the other for firefighters. In February 2021, 36 individual active and retired beneficiary members from a few suburban and downstate police and firefighter pension funds filed a lawsuit against the Governor and other state officials. The lawsuit claimed the Act diminishes and impairs their pension benefits because (1) prior to the Act, the local funds could “exclusively manage and control their investment expenditures and income”; (2) their “voting power and thereby an effective say in the selection of investment managers, investments, risks, rates of return, costs and expenses” was diluted by the participation of members of other local funds; and (3) the Act constituted an unconstitutional "taking" of their property.
The trial court ruled in favor of the defendants, rejecting plaintiffs' arguments. The case made its way to the Illinois Supreme Court which also ruled in favor of the defendants. Specifically, the Illinois Supreme Court found that plaintiffs had no constitutional right to how the local pension funds are invested (whether at the state or local level) or in the selection of investment managers. The Court also rejected the plaintiffs' constitutional "takings" claim, holding that while participants have a right to receive their promised benefits, they do not have a private property right in the source of funding for those payments. Arlington Heights Police Pension Fund v. Pritzker, et al.
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