The Illinois Senate passed a bill Monday that would 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 Senate voted 37-14 to pass the bill, which 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 Illinois House had passed the bill 72-40 in April 2019.
Illinois Sen. Robert Martwick, sponsor of the bill, said in a phone interview the bill was intended to be “a measure that provides transparency as to the true nature of the financial condition of the Chicago firefighters pension fund.”
Mr. Martwick said 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.
By leaving the structure of the lower COLA in the Illinois pension code, it allowed the city to continue underfunding its contribution to the fund, Mr. Martwick said.
As of Dec. 31, 2019, the pension plan’s funding ratio was 18.4%, according to its most recent actuarial valuation report.
Actuary Segal Group said in the report 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.”
Mr. Martwick said, “The last thing you need to do is intentionally underfund it any further.”
Brad Cole, executive director of the Illinois Municipal League, said in a statement: “The state and local municipalities are struggling with an enormous unfunded pension liability debt.”
“(The bill) would increase those pension obligations passed during a lame-duck session with little notice or debate. 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.”
Whether Gov. J.B. Pritzker intends to sign the bill into law was not known; his spokeswoman, Jordan Abudayyeh, could not be immediately reached for further information.