Court dismisses Illinois pension consolidation legal challenge

An Illinois Circuit Court judge refused a trial which sought to stop the consolidation of the state’s 650 fire and police pension funds, rejecting the plaintiff’s claims that a law enacting the decision violated the state constitution.

In 2019, the Illinois General Assembly passed a bill that allows for the consolidation of 650 police and fire pensions to consolidate their funds into two statewide funds for purposes of investment, one for the police and the other for the fire brigade. The move aims to improve the financial stability of pension funds and ease pressure on local governments to raise taxes to fund these pensions.

However, in February 2021, 18 police and fire pension funds, including active and retired members, filed a lawsuit against Illinois Governor JB Pritzker, who signed the bill into law. The lawsuit alleged that the consolidation violated two provisions of the Illinois Constitution: the Pension Protection Clause and the Revenue Clause.

Plaintiffs asserted that they had a contractual and enforceable right to exclusively manage and control their investment expenses and income, including interest dividends, capital gains and other investment distributions, to which they claim , consolidation had undermined.

Although Justice Robert Villa wrote in the ruling that the consolidation “undeniably diminished the voting weight of board members,” he also argued that traditional voting rights were not at issue.

“The main distinction between the present case and the aforementioned cases,” Villa writes, “is that these cases involved traditional ‘voter rights’ claims such as due process, equal protection, vagueness constitutional, improper delegation of legislative authority, and other safeguards found in the constitutions of the United States and Illinois.

The decision states that voting is not currently a benefit under the retirement clause of the state constitution, pointing out that the courts “have not yet ruled that the voting rights for members of the council of Administration of pension funds falls under the protections of the retirement clause. It also states that the taking clause claim cannot be tied to real property, as required by Illinois law.

“No allegation or evidence has been presented that claimants who are currently receiving their pension benefits have suffered a current loss or will suffer a future loss in the payment of benefits,” Villa wrote in its ruling. “Similarly, there is no evidence that those still employed will suffer a similar fate when they finally retire.” He also says there was ‘no argument or evidence presented’ that the money transferred to the new funds is being used for a different public purpose – such as funding road improvements – which impacts benefits. complainants’ current or future pension plans.

Applicants have 30 days to appeal the decision.

The Firefighters’ Pension Investment Fund applauded the court’s decision, saying in a statement that it will continue to implement the transition process, which must be completed by June 30. The fund said about 90% of local firefighter pension funds have so far completed the transition process and it is working with the remaining funds. Do the same thing. The fund said it had $6.9 billion in assets under management.

The Illinois Police Officers Retirement Investment Fund said it completed its third tranche of asset transfers on May 2 and that to date, 46 plans have transferred more than $1 billion of assets in the IPOPIF consolidated fund. He also said that another 93 funds are currently in the process of transferring funds on June 1 or June 24. He added that if all the plans make the transfer, there will be more than $4 billion in assets in the consolidated IPOPIF fund. by the end of June.

Related stories:

Illinois passes bill consolidating police, fire department pensions

Illinois group wants municipal pension consolidations

New Illinois law allows $1 billion in pension bonds, expands buyout option

Tags: court ruling, Firefighters’ Pension Investment Fund, Illinois, JB Pritzker, lawsuit, Pension Consolidation, Robert Villa

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