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Illinois Pension Reform law tossed out, found unconstitutional

The Illinois Supreme Court struck down a pension law that was created in 2013, finding it unconstitutional.
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The Illinois Supreme Court struck down a pension law that was created in 2013, finding it unconstitutional.

The Pension Reform Bill was aimed at unloading a $105 billion debt, reported Chicago Tribune. The debt had been generated from cost-of-living increases for retirees, extended retirement ages, and salary used for pension benefits.

On Friday, May 8, 2015, the Illinois Supreme Court unanimously agreed to toss it out.

Related: Taxpayers United: Illinois taxpayers subsidizing six-figure pensions

“The Supreme Court’s decision confirms that benefits earned cannot be reduced,” said Illinois Governor Bruce Rauner. “That’s fair and right, and why the governor long maintained that SB 1 is unconstitutional. What is now clear is that a Constitutional Amendment clarifying the distinction between currently earned benefits and future benefits not yet earned, which would allow the state to move forward on common-sense pension reforms, should be part of any solution.”

According to Republican Justice Lloyd Karmeier, the law was in violation of the pension protection clause, which was part of a 1970 provision of the Illinois Constitution.

“The law was clear that the promised benefits would therefore have to be paid and that the responsibility for providing the state’s share of the necessary funding fell squarely on the legislature’s shoulders,” Karmeier said.

“Ultimately, the only way Illinois can break the cycle of siphoning more and more tax dollars and sacrificing more and more state programs to pay for pensions is to follow the lead of the private sector and move new employees to a 401(k)-style system,” said Illinois Policy Institute CEO John Tillman. “In the short term, it will not be surprising to see calls to change the state constitution or allow Illinois to file for bankruptcy.”

Karmeier noted that the General Assembly “is largely responsible” for the “crisis,” also noting that “other public pension systems managed to avoid” a situation like this.

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