Skip to main content
MENU
Subscribe
  • Subscribe
  • Account
  • LOGIN
  • Topics
    • Alternatives
    • Consultants
    • Coronavirus
    • Courts
    • Defined Contribution
    • ESG
    • ETFs
    • Hedge Funds
    • Industry Voices
    • Investing
    • Money Management
    • Opinion
    • Partner Content
    • Pension Funds
    • Private Equity
    • Real Estate
    • Russia-Ukraine War
    • SECURE Act 2.0
    • Special Reports
    • White Papers
  • Rankings & Awards
    • 1,000 Largest Retirement Plans
    • Top-Performing Managers
    • Largest Money Managers
    • DC Money Managers
    • DC Record Keepers
    • Largest Hedge Fund Managers
    • World's Largest Retirement Funds
    • Best Places to Work in Money Management
    • Excellence & Innovation Awards
    • WPS Innovation Awards
    • Eddy Awards
  • ETFs
    • Latest ETF News
    • Fund Screener
    • Education Center
    • Equities
    • Fixed Income
    • Commodities
    • Actively Managed
    • Alternatives
    • ESG Rated
  • ESG
    • Latest ESG News
    • The Institutional Investor’s Guide to ESG Investing
    • ESG Sustainability - Gaining Momentum
    • Climate Change: The Inescapable Opportunity
    • Impact Investing
    • 2022 ESG Investing Conference
    • ESG Rated ETFs
  • Defined Contribution
    • Latest DC News
    • DC Money Manager Rankings
    • DC Record Keeper Rankings
    • Innovations in DC
    • Trends in DC: Focus on Retirement Income
    • 2022 Defined Contribution East Conference
    • 2022 DC Investment Lineup Conference
  • Searches & Hires
    • Latest Searches & Hires News
    • Searches & Hires Database
    • RFPs
  • Performance Data
    • P&I Research Center
    • Earnings Tracker
    • Endowment Returns Tracker
    • Corporate Pension Contribution Tracker
    • Pension Fund Returns Tracker
    • Pension Risk Transfer Database
    • Future of Investments Research Series
    • Charts & Infographics
    • Polls
  • Careers
  • Events
    • View All Conferences
    • View All Webinars
    • 2022 Retirement Income Conference
    • 2022 Managing Pension Risk & Liabilities
    • 2022 WorldPensionSummit
Breadcrumb
  1. Home
  2. COURTS
May 08, 2015 01:00 AM

Illinois pension reform law unconstitutional, state Supreme Court rules

Meaghan Offerman
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print

    The Illinois Supreme Court unanimously ruled Friday the Illinois pension reform law passed in 2013 is unconstitutional, affirming the decision reached in a Sangamon County Circuit Court in November.

    The pension law — which reduced cost-of-living adjustments, capped pensionable salaries and raised retirement ages — violates the state's constitutional clause that pension benefits “shall not be diminished or impaired,” the Supreme Court affirmed Friday.

    On Nov. 26, Attorney General Lisa Madigan appealed the Circuit Court's ruling to the state Supreme Court, maintaining pension benefits could be altered in light of Illinois' roughly $100 billion pension funding crisis.

    The Supreme Court rejected that argument.

    “In ruling as we have today, we do not mean to minimize the gravity of the state’s problems or the magnitude of the difficulty facing our elected representatives,” said Justice Lloyd Karmeier writing for the court. “It is our obligation, however, just as it is theirs, to ensure that the law is followed. That is true at all times. It is especially important in times of crisis when, as this case demonstrates, even clear principles and long-standing precedent are threatened. Crisis is not an excuse to abandon the rule of law.”

    The Supreme Court faulted the state for underfunding the plans.

    The pension funding crisis “is a crisis for which the General Assembly itself is largely responsible,” Mr. Karmeier said.

    While acknowledging that “market forces” have “periodically placed significant pressures on public pension systems,” Mr. Karmeier maintained, “the law was clear that the promised benefits would therefore have to be paid, and that the responsibility for providing the state’s share of the necessary funding fell squarely on the Legislature’s shoulders.”

    The law had been slated to go into effect June 1, but was put on hold by Sangamon County Circuit Court Judge John Belz to determine its legality.

    Sean Smoot, attorney for one of the plaintiffs, We Are One Illinois, praised the Supreme Court’s ruling.

    “We are thankful that the Supreme Court has unanimously upheld the will of the people, overturned this unfair and unconstitutional law, and protected the hard-earned life savings of our members and other public service workers and retirees,” Mr. Smoot said in an e-mail Friday. “I, along with our entire coalition, look forward to working with Illinois' political leaders in developing a fair and constitutional solution to pension funding, and I know we all remain ready to work with anyone of good faith to do so.”

    State Rep. Elaine Nekritz, who supported the 2013 pension law, said the ruling makes the state’s path to pension reform “much more difficult.”

    “Our goal from the beginning of our work on pension reform has been to strike a very careful, very important balance between protecting the hard-earned investments of state workers and retirees, and the equally important investments of all taxpayers in education, human and social services, health care and other vital state priorities,” said Ms. Nekritz in an e-mail. “In its ruling today, the Supreme Court struck down not only the law, but the core of that balance. Now our already dire pension problem will get that much worse and our options in striking that balance are limited. Our path forward from here is now much more difficult, and every direction will be more painful than the balance we struck in Senate Bill 1.”

    A spokeswoman for Ms. Madigan said Friday: “The court has provided a definitive interpretation of the constitution that must now guide the Legislature and the governor going forward.”

    It remains to be seen how the ruling will affect Chicago’s attempts at pension reform.

    Chicago Mayor Rahm Emanuel maintained Friday that a 2014 pension reform law is constitutional.

    The Chicago pension law passed in June raises employee and employer contributions and reduces retiree cost-of-living adjustments for the $5.1 billion Chicago Municipal Employees' Annuity & Benefit Fund and $1.4 billion Chicago Laborers' Annuity & Benefit Fund.

    “That reform is not affected by today’s ruling, as we believe our plan fully complies with the state constitution because it fundamentally preserves and protects worker pensions rather than diminishing or impairing them,” Mr. Emanuel said in a statement.

    Related Articles
    Amending the Illinois Constitution a tough path for pension reform
    Illinois court to hear arguments on pension reform law's constitutionality
    Judge rules Illinois pension reform law is unconstitutional
    Illinois solicitor general tells state Supreme Court that pension clause can be…
    UPDATED: Chicago's pension funds by the numbers
    Chicago Laborers delays commitments, digesting reversal of state pension reform
    Illinois, Chicago run out of options
    Bill to reduce Chicago pension contributions goes to governor
    Illinois governor unveils new pension reform bill
    Judge rules Chicago pension fix is unconstitutional
    Recommended for You
    ONLINE_180539987_AR_0_AJVEYGQPKZAX.jpg
    Federal judge dismisses ERISA complaint against Olin
    gavel_scales_lawbook_1550-main_i.jpg
    Appeals court upholds dismissal of ERISA suit against CommonSpirit Health
    Ben&Jerrys-Unilever-main_i.jpg
    St. Clair Shores Police and Fire sues Unilever, alleging securities law violations
    New SEC Rule on Fair Pricing Determination Needs Careful Consideration
    Sponsored Content: New SEC Rule on Fair Pricing Determination Needs Careful Consideration

    Reader Poll

    June 6, 2022
    SEE MORE POLLS >
    Sponsored
    White Papers
    Nearing the finish line: Ideas on end-state investing for corporate DB plans
    The Meaning of "Portfolio Intelligence"
    Credit Indices: Closing the Fixed Income Evolutionary Gap
    Forever in Style: Benchmarking with the Morningstar® Broad Style Indexes℠
    Crossroads: Politics, Inflation, & Bonds
    Is there a mid-cap gap in your DC plan?
    View More
    Sponsored Content
    Partner Content
    The Industrialization of ESG Investment
    For institutional investors, ETFs can make meeting liquidity needs easier
    Gold: the most effective commodity investment
    2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios
    Ten ways retirement plan professionals add value to plan sponsors
    Gold: an efficient hedge
    View More
    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today
    June 20, 2022 page one

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    130 E. Randolph St.
    Suite 3200
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Content Solutions
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    • Privacy Request
    Pensions & Investments
    Copyright © 1996-2022. Crain Communications, Inc. All Rights Reserved.
    • Topics
      • Alternatives
      • Consultants
      • Coronavirus
      • Courts
      • Defined Contribution
      • ESG
      • ETFs
      • Hedge Funds
      • Industry Voices
      • Investing
      • Money Management
      • Opinion
      • Partner Content
      • Pension Funds
      • Private Equity
      • Real Estate
      • Russia-Ukraine War
      • SECURE Act 2.0
      • Special Reports
      • White Papers
    • Rankings & Awards
      • 1,000 Largest Retirement Plans
      • Top-Performing Managers
      • Largest Money Managers
      • DC Money Managers
      • DC Record Keepers
      • Largest Hedge Fund Managers
      • World's Largest Retirement Funds
      • Best Places to Work in Money Management
      • Excellence & Innovation Awards
      • WPS Innovation Awards
      • Eddy Awards
    • ETFs
      • Latest ETF News
      • Fund Screener
      • Education Center
      • Equities
      • Fixed Income
      • Commodities
      • Actively Managed
      • Alternatives
      • ESG Rated
    • ESG
      • Latest ESG News
      • The Institutional Investor’s Guide to ESG Investing
      • ESG Sustainability - Gaining Momentum
      • Climate Change: The Inescapable Opportunity
      • Impact Investing
      • 2022 ESG Investing Conference
      • ESG Rated ETFs
    • Defined Contribution
      • Latest DC News
      • DC Money Manager Rankings
      • DC Record Keeper Rankings
      • Innovations in DC
      • Trends in DC: Focus on Retirement Income
      • 2022 Defined Contribution East Conference
      • 2022 DC Investment Lineup Conference
    • Searches & Hires
      • Latest Searches & Hires News
      • Searches & Hires Database
      • RFPs
    • Performance Data
      • P&I Research Center
      • Earnings Tracker
      • Endowment Returns Tracker
      • Corporate Pension Contribution Tracker
      • Pension Fund Returns Tracker
      • Pension Risk Transfer Database
      • Future of Investments Research Series
      • Charts & Infographics
      • Polls
    • Careers
    • Events
      • View All Conferences
      • View All Webinars
      • 2022 Retirement Income Conference
      • 2022 Managing Pension Risk & Liabilities
      • 2022 WorldPensionSummit