Retired Teachers Challenge Illinois Pension Reform Law

The Illinois Retired Teachers Association (IRTA), along with the Illinois Association of School Administrators, filed a lawsuit in Cook County Circuit Court on December 27, 2013. The suit challenges the constitutionality of a new pension reform law in Illinois (Public Act 98-0599), alleging that it negatively affects the pension benefits of retired teachers, according to a statement on the IRTA website.

The suit alleges that the law violates the Illinois Pension Code as it protects the retirement benefits of educators, both retired and active. In addition, the suit seeks to “void [the law] in its entirety because it violates the Pension Protection Clause of the Illinois Constitution.”

Illinois Governor Pat Quinn, Illinois Comptroller Judy Baar Topinka and the Illinois Teachers’ Retirement System’s (TRS) board of trustees are named as defendants in the suit, which seeks preliminary and permanent injunctive relief, according to a news report from Reuters. The suit was filed as a class action, representing retired and active members of TRS, who are not currently members of any teachers’ labor union.

In addition, says the news report, a coalition of public labor unions is contemplating filing a similar lawsuit to contest the new pension reform law.

The law is designed to save the state of Illinois $160 billion over 30 years, while reducing the unfunded pension liability by 20%, Reuters reports. The law offers workers and retirees a reduction in contributions toward pensions, as well as a method for ensuring the state fully makes its contributions.

Currently scheduled to go into effect as of June 1, the law will also replace automatic, annually compounded 3% cost-of-living increases for retirees with smaller annual adjustments for the highest earners. Some workers will have the option of freezing their pension and starting a 401(k)-style plan. Also, the retirement age will be pushed back for some workers (see “Illinois Governor Signs Pension Reform Law”).