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Pension Funds

Section of Illinois pension reform ruled unconstitutional

The Illinois Supreme Court ruled as unconstitutional a portion of a pension reform act enacted in 2012 that prevented participants in three Chicago pension funds from receiving credit for union activities.

The ruling overturns a bill passed by the Illinois General Assembly and signed into law by then-Gov. Pat Quinn that was meant to curb what were seen by some as abuses by union leaders who were basing their annuities on their larger union salaries.

The Nov. 28 ruling affects the $10.8 billion Chicago Public School Teachers' Pension & Retirement Fund, the $4.3 billion Chicago Municipal Employees' Annuity & Benefit Fund and the $1.2 billion Chicago Laborers Employees' Annuity & Benefit Fund.

Before the passage of that 2012 act, while the specific rules for participants in the teachers' fund and the other two funds differed, primarily it meant participants could take a leave of absence from their primary responsibilities to work for union organizations and receive credit for both.

The unanimous ruling by the court cited the Illinois Constitution provision that states "membership in any pension or retirement system of the state, any unit of local government, or any agency or instrumentality thereof, shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired."

The new ruling echoes the March 2016 ruling by the Illinois Supreme Court citing the provision regarding the larger pension reform signed by Mr. Quinn in June 2014, and which took effect Jan. 1, 2015, raising employee and employer contributions and reduced retiree cost-of-living adjustments for participants in the Chicago Municipal Employees' Annuity & Benefit Fund and Chicago Laborers Employees' Annuity & Benefit Fund.