Illinois Gov. J.B. Pritzker signed a bill into law Monday to remove age-based restrictions for certain participants in the $863 million Chicago Firemen's Annuity & Benefit Fund to receive annual 3% cost-of-living adjustments.
The new law removes the eligibility restriction for participants who retire at age 55 who are born after Jan. 1, 1966. Those participants will now receive a 3% COLA.
The Senate voted 37-14 in January to pass the bill, and the Illinois House had passed it 72-40 in April 2019.
IIllinois Sen. Robert Martwick, sponsor of the bill, said in a January phone interview the bill was drafted to confront the city of Chicago continuing to underfund its contribution to its Firemen's Annuity & Benefit Fund
He said at the time that the Illinois Pension Code has in the past provided a COLA for Chicago firefighters based not on their years of service, but on their birthdate. Those born before a certain date would receive a 3% COLA and those afterward would receive a 1.5% COLA.
"For the last 40 years, every five years with a wink and a nod, the General Assembly and the city as recently as 2017 moved the date forward every few years as the next lineup of firefighters retired," Mr. Martwick said.
That structure allowed the city to make lower contributions, Mr. Martwick said.
In the pension fund's most recent actuarial valuation report with data as of Dec. 31, 2019, its actuary Segal Group found that the pension fund is at risk of becoming insolvent and "even under the statutory funding schedule, the funded ratio is projected to remain below 50% through 2044."
The pension fund's funding ratio as of that date was 18.4%.
"The state and local municipalities are struggling with an enormous unfunded pension liability debt," Brad Cole, executive director of the Illinois Municipal League, said in a January statement.
"(The bill) would increase those pension obligations passed during a lame-duck session with little notice or debate," he said. "This is better left to the normal agreement process, where all sides can negotiate and work out their respective positions in full transparency and dialogue."