Second suit filed over legality of Chicago pension reform

A second lawsuit challenging the legality of a 2014 Chicago pension reform law was filed in Cook County Circuit Court Monday.

The lawsuit brought by the Municipal Employees Society of Chicago, along with one active and one retired city worker, challenges the constitutionality of pension benefit cuts for participants in the $5.3 billion Chicago Municipal Employees' Annuity & Benefit Fund and $1.4 billion Chicago Laborers' Annuity & Benefit Fund.

The Municipal Employees Society of Chicago is an advocacy group for participants in the two pension funds.

The pension law, signed by Gov. Pat Quinn on June 9 and scheduled to take effect Jan. 1, raises employee and employer contributions and reduces retiree cost-of-living adjustments for participants in the two plans.

The Illinois Constitution “explicitly protects the benefits of participation in a government retirement system from being diminished or impaired,” the lawsuit states.

Chicago Mayor Rahm Emanuel has maintained the reforms are constitutional and the two pension funds risk going broke without them. A spokesman for Mr. Emanuel could not immediately be reached.

The municipal and laborers' funds are approximately 38% and 58% funded, respectively, and have roughly $9.4 billion in unfunded liabilities combined, according to city documents.

Members of the Municipal Employees' Annuity & Benefit Fund and the unions that represent them filed the first lawsuit against the Chicago pension law on Dec. 16. Hearings in the municipal fund case are scheduled for Jan. 28 and 30 and Feb. 6 and 11, said Clint Krislov, attorney for the plaintiffs in the second lawsuit.