…Attorney General Agrees to Postponement as Well

State Attorney General Lisa Madigan agreed to postpone implementation

of the pension reform law, but still wants to see it enacted.

THE STATE Universities Annuitants Association (SUAA) and other groups representing employee and retiree interests reached a tentative agreement with Illinois Attorney General Lisa Madigan to postpone implementation of the State’s new pension law Senate Bill 1, Public Act 98-599.

THE AGREEMENT is pending as it requires judicial approval before going into effect. The agreement delays implementation of the pension law until July 1, 2015. Specifically, the agreement protects SURS members currently eligible for retirement by allowing them to delay their retirement decision until the constitutionality of the new pension law is determined. It allows them to calculate their money purchase annuity based on the effective rates as of June 30, 2014, and allows them to avoid the skips in the annual increases if the changes to the pension are upheld. The agreement also ensures that any unnecessary pension contributions will be refunded. 

“IT TOOK time and a lot of work but in the end we reached an agreement on a critical issue to our members,” said SUAA Executive Director Linda Brookhart. “The agreement ensures that our members will have all of the facts before they have to make a decision on whether to retire or not. It is my hope the court will do the right thing and allow this agreement to stand.”

HOWEVER, WHILE Madigan’s “filings all but concede that the benefit cuts passed by the General Assembly appear to violate the plain language of Article VIII, Section 5 of the Illinois Constitution that deems all State and local government pensions to be ‘an enforceable contractual relationship, the benefits of which shall not be diminished or impaired,’” according to Eric Zorn in the Chicago Tribune, Madigan still is asking the courts to ultimately uphold the law. See http://articles.chicagotribune.com/2014-05-18/opinion/ct-oped-zorn-0518-20140517_1_pension-crisis-state-pension-pension-changes.

SUAA ALSO has filed a lawsuit challenging Senate Bill 1, PA 98-599. The case is pending in the Sangamon County Circuit Court. SUAA's lawsuit challenges the changes to the pension code on the basis that they violate three different clauses of the Illinoi s Constitution. The suit claims Senate Bill 1 violates the Pension Clause, Article 13 Sec. 5, which forbids diminishment of pensions, the Takings Clause, Article 1 Sec. 15, which forbids taking of private property for public use without just compensation, and the Contracts Clause, Article 1 Sec. 16, which forbids the State to breach contracts that it makes.

SURS MEMBERS have the ability to choose one of three different retirement options but once they choose a retirement option – they are locked into their retirement plan. By changing the rules governing the various SURS retirement plans, SUAA believes the State is in breach of contract.