Illinois union group asks court to suspend pension reform law

State has worst-funded pension system in U.S.

CHICAGO (Reuters) — A coalition of Illinois public labor unions asked a state court on Monday to stop a June 1 start to a pension reform law intended to save the state nearly US$145 billion over three decades.

We Are One Illinois filed a motion for a temporary restraining order and preliminary injunction in Sangamon County Circuit Court, saying that the law should not become effective before its constitutionality is determined by the courts.

"The fair and proper thing to do is not to allow this legislation to cause any damage until the courts have spoken on its constitutionality. Otherwise, teachers, first responders, nurses, and other state and university employees and retirees will be irreparably harmed," said a statement from Michael Carrigan, president of the Illinois AFL-CIO, on behalf of the coalition.

There was no immediate reaction to the filing from Governor Pat Quinn's office.

The law, enacted in December, reduces and suspends cost-of-living increases for pensions, raises retirement ages and limits the salaries on which pensions are based.

The reforms are expected to save the state nearly US$145 billion over 30 years. Illinois has had the worst-funded pension system among the states after decades of skipping or skimping on pension payments. As a result, credit rating agencies have slapped Illinois with the lowest ratings among states.

In its motion, the union coalition said the state is not anticipating any savings resulting from the law until fiscal 2016, more than a year from now.

The law offers workers and retirees some sweeteners, including a reduction in contributions toward pensions and a method for ensuring the state fully makes its contributions.

In anticipation of a legal fight, the pension reform law includes a preamble that concludes Illinois' fiscal problems could not be solved without changes to the retirement system structure.

The Illinois Supreme Court in March consolidated lawsuits filed against the law by the coalition, teachers, retiree groups and others in Sangamon County Circuit Court in the state capital of Springfield. The lawsuits claim the law violates the Illinois Constitution, which stipulates that public worker pensions are contracts that the state cannot diminish or impair.

Latest stories