Illinois Supreme Court Upholds Police and Fire Pension Funds Consolidation

The court rejected arguments that the law violates the state constitution's pension protection clause, stating that it only protects the financial benefits retirees receive, not their ability to control investment decisions.

• The Illinois Supreme Court has upheld a law consolidating hundreds of suburban and downstate police and firefighter pension funds, rejecting arguments that it violates the state constitution's pension protection clause.
• The law, signed by Gov. J.B. Pritzker in 2019, aimed to bring greater financial stability to the roughly 650 local funds serving communities outside Chicago and provide property tax relief to local residents.
• A group of 18 pension funds and about three dozen active police and firefighters and retirees challenged the law in a 2021 lawsuit, arguing that the move violates the state constitution’s guarantee that public employee pension benefits “shall not be diminished or impaired.”
• The court found that the state constitution protects only the financial benefits that retirees ultimately receive from the pension funds, not the ability to vote in elections for local pension board members or the ability to have local board members control and invest pension funds.
• The court also rejected claims that having the local funds cover startup costs for the two consolidated funds would affect benefits, and that the transfer of assets to the centralized funds was a violation of property rights.

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