A judge in Illinois last week made a ruling saying its public employee retirement system is in violation of the state’s constitutional provision, which prevents the government from slashing pension benefits.
The latest ruling, which will be appealed by the state, puts the state’s efforts in danger in one of the most underfunded retirement systems in the country.
Politicians passed the pension law last year after years of debate regarding the increasing number of liabilities from the state, which led to a drop in credit rating.
The pension law ruling that was deemed unconstitutional minimizes future retirement costs by further reducing cost-of-living increases for retired employees, increasing age of retirements for younger workers, and size-capping pensions.
Benefits for public employee pension us under the protection of the Illinois Constitution clause indicating that the benefits will never be impaired or diminished.
The state argued in court that under its “police powers,” it’s capable of making changes on the benefits.