Pension Protection Clause of the Illinois Constitution
Updated: November 1, 2015
Issue: In 2015 a unanimous Illinois Supreme Court upheld the Pension Protection Clause in the Illinois Constitution of 1970.
Pension benefits and contributions for existing teachers and government employees are guaranteed by Article XIII, Section 5 of the Illinois Constitution, known as the “Pension Protection Clause.”
Article XIII, Section V of the Illinois Constitution, “Pension and Retirement Rights,” states:
“Membership in any pension or retirement system of the State, any unit of local government or school district, or any agency or instrumentality thereof, shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired.”
Because of Illinois’ on-going budget deficit, public pension critics argue that retirement benefits to teachers and government employees should not be guaranteed by the constitution, while the supporters of public pensions say that pension benefits are a promise that should be kept.
In the past, a central focus of this debate were differing interpretations of the Pension Protection Clause. Pension supporters said the language of the constitution was clear and that all current public pension benefits cannot be diminished or impaired. Pension critics suggested a different interpretation; that the constitution did not protect retirement benefits not yet earned. They said pension benefits for active TRS members could be left intact for service performed through a date certain, but reduced for future service after that date that is not yet performed.
Discussion: On May 8, 2015, a unanimous Illinois Supreme Court upheld the literal meaning of the Pension Protection Clause. The Court said that Clause cannot be interpreted to include any qualifications or meanings that are not part of the plain language of the clause.
The case before the Court, Heaton v. Quinn, was a challenge to a 2013 state law that changed the Illinois Pension Code and lowered retirement benefits for the members of TRS and all state pension systems. State officials argued that the Pension Protection Clause could be suspended by the state’s duty to use its “police powers” to override the constitution and take action to solve a systemic and “dire” financial problem the state has faced for years. The Supreme Court disagreed and said:
“…accepting the State’s position that reducing benefits is justified by economic circumstances would require that we allow the legislature to do the very thing the pension protection clause was designed to prevent it from doing…
“Rather, it is a statement by the people of Illinois, made in the clearest possible terms, that the authority of the legislature does not include the power to diminish or impair the benefits of membership in a public retirement system. This is a restriction the people of Illinois had every right to impose.”
The Court’s decision in Heaton v. Quinn means that the pension laws in place at the time a public employee begins government service control his or her pension benefits forever. Those benefits can be increased or enhanced, but they cannot be diminished or impaired.
Pension Payment Guarantee in Illinois Law
Updated: November 1, 2015
Issue: In recent years, 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, such as TRS, goes broke, retirees have no recourse to collect the money owed them. The Civic Committee cited 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: The pensions of all TRS members are guaranteed by the State of Illinois.
In its argument, the Civic Committee does not quote the entire law when referencing the Illinois Pension Code and leaves out important language. 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, the 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 Civic Committee 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.”
Under state law, the payment of TRS Pensions is an obligation of the State of Illinois.
In addition, Article XIII Section 5 of the Illinois Constitution protects “membership” in any state pension system as an “enforceable contractual relationship.”