Importance of Proper Funding
On June 9, 2014, Senate Bill 1922, which called for several changes to LABF pension benefits beginning January 1, 2015, was signed into law and became Public Act 98-0641 (“Act”). Specifically, the Act called for reductions in future automatic annual increases in annuity, commonly referred to as “COLAs.” The Act also required increased pension contributions from active employees in exchange for actuarial-based funding from the City of Chicago that would have put the LABF on a path toward reaching 90% funded status by 2055. In late December 2014, two lawsuits were filed challenging the constitutionality of the Act on the grounds that it diminished pension benefits and, therefore, violated the pension protection clause of the Constitution of the State of Illinois. On July 24, 2015, the Act was ruled unconstitutional by the Circuit Court of Cook County. The ruling is currently under appeal in the Illinois Supreme Court.
The LABF has informed the City of Chicago, the State of Illinois, and the bargaining units that represent the majority of the employees covered by the LABF, that the LABF faces the risk of insolvency unless it receives proper funding. Click here to read the letter recently sent to the elected officials of the City of Chicago, State of Illinois, and the bargaining units. As you will note, the letter also includes a report showing the current funding situation of the LABF as well as the Municipal Fund, including comparisons to other pension funds within the State of Illinois.