Legislation and Issues
Pension Protection Clause of the Illinois Constitution
Issue: Because of Illinois’ on-going budget deficit, public pension critics argue that benefits to existing teachers and government employees should not be guaranteed as they are now. Some proposals want to lower benefits to save the state billions of dollars every year. Others want to raise member contributions to generate billions of dollars every year. Another argument holds that pension benefits for existing teachers should be left intact for service they have performed but reduced for future service they have not yet performed.
Discussion: Pension benefits and contributions for existing teachers and government employees are guaranteed by Article XIII, Paragraph 5 of the Illinois Constitution and cannot be “diminished” in any way. Since 1972, at least seven court cases have affirmed the meaning of this clause. There is no language in the Constitution that remotely comes close to allowing pension benefits to be changed prospectively for service that has not yet been performed. Court decisions have held that the pension law that is in place at the time a public employee begins government service controls his or her pension benefits forever.
Issue: The Civic Committee of the Commercial Club of Chicago has said that pensions due to Illinois teachers and public employees are not guaranteed by the state; implying that if a state pension system goes broke, retirees have no recourse to collect the money owed them. It cites the Illinois Pension Code – 40 Illinois Compiled Statutes 5/22-403 – as saying that “any pension payable under any law herein before referred to shall not be construed to be a legal obligation or debt of the State…”
Discussion: For TRS members, their pensions are guaranteed by the State of Illinois. The Civic Committee does not quote the entire law when referencing the Illinois Pension Code and leaves out an important part. The entire clause reads: “…any pension payable under any law herein before referred to shall not be construed to be a legal obligation or debt of the State unless otherwise specifically provided in the law creating such fund.” In other words, language in another state law creating a pension fund can override this section of the Illinois Pension Code.
For Illinois teachers, the section of the Pension Code cited by the Commercial Club is overridden by 40 ILCS 5/16-158(c), a part of the law that created TRS in 1939. This section specifically states, “Payment of the required State contributions and of all pensions, retirement annuities, death benefits, refunds, and other benefits granted under or assumed by this System, and all expenses in connection with the administration and operation thereof, are obligations of the State.”
In addition, Article XIII Section 5 of the Illinois Constitution protects “membership” in any state pension system as an “enforceable contractual relationship.”