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Tuesday, November 25, 2014

Illinois Pension Reform Law Unconstitutional

Unless you have been living under a rock, you are familiar with Illinois' public employee pension "crisis" and the legislature's attempts to fix that crisis through reform legislation.  Pursuant to Public Act 98-0599, the Illinois General Assembly approved a variety of amendments to the Illinois Pension Code including the following: (1) change to the automatic annual increase provision; (2) a caps on pensionable salaries; (3) an increase in the retirement age; and (4) alteration of the method for calculating interest. among others.  

A number of lawsuits were filed challenging the Act.  Many of these lawsuits were consolidated before Judge Belz of the Sangamon County circuit court.  Last week, Judge Belz issued an opinion striking down the Act as unconstitutional.  Specifically, the Judge held that the "Act without question diminishes and impairs the benefits of membership in State retirement systems" in violation of the Illinois Pension Clause's protection against the diminishment and impairment of pension benefits, which are "absolute and without exception."  

Because the Act contained a clause declaring the various sections "mutually dependent and insverable from one another," the Judge declared the Act unconstitutional in its entirety. 

The legislature will have to go back to the drawing board on this one, but this decision might provide some guidance at least in what pension reform measures will not pass constitutional muster.

Post Authored by Julie Tappendorf


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