What the Public Act 98-0641 Ruling Means For You
On June 9, 2014, the Illinois Governor signed Senate Bill 1922 into law. Senate Bill 1922, which became Public Act 98-0641, made several changes to pension benefits beginning January 1, 2015. Namely, the Act called for reductions in future automatic annual increases in annuity (commonly referred to as the “COLA”) and required increased pension contributions from active employees in exchange for additional funding from the City of Chicago and other safeguards that would have put the LABF on a path toward solvency. 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 Circuit Court of Cook County ruled that Public Act 98- 0641 is unconstitutional and issued an order requiring the LABF to begin administering pension benefits as they existed prior to January 1, 2015. Furthermore, on July 29, 2015, the Court denied a motion to halt the implementation of the Court’s order pending appeal. While the trial court order affecting LABF became final on Wednesday, July 29, 2015, it is being appealed to the Illinois Supreme Court and the Supreme Court has agreed to hear the case in November of this year. In the meantime, LABF will implement the trial court order.
WHAT DOES THIS MEAN FOR LABF MEMBERS?
Impact on Annuitant Members:
LABF will adjust eligible members’ future monthly annuity payments to reflect the 3% “COLA” they would have otherwise received beginning with the January 1, 2015 payment if not for the enactment of Public Act 98-0641. This will begin with the October 1, 2015 annuity payment.
LABF will make retroactive payments to eligible members reflecting the cumulative year-to-date difference between the 3% COLA the Court ruled annuitants should have received beginning January 1, 2015 and the 0.85% COLA that members actually received. Members should expect to receive this payment separate from their regular annuity payments by the end of September.
Impact on Active Members:
The active members’ employers (the City of Chicago in most cases) have already reverted back to deducting 8.5% of pensionable “salary” for pension purposes (versus 9% under the Act) beginning with the mid-August 2015 payroll.
By sometime in October 2015, the employers will make active members whole for all year-to-date excess pension contributions (equal to ½% of pensionable “salary”).
Please note that all timing is subject to change. In the event that the implementation of the Court’s order is delayed, an updated timeline will be posted on this website.
Thank you for your continued patience during this historic time.