Illinois Worker Retiree Group Sues Over Benefit Cuts Plan

The Illinois State Employees Association Retirees sued state officials and retirement systems to block a plan that reduces pension benefits to fix a $100 billion shortfall.

The plan violates the Illinois constitution’s guarantee that benefits of any state pension or retirement system “shall not be diminished or impaired,” according to a complaint filed yesterday in state court in Springfield, Illinois.

Illinois lawmakers last month approved a bill designed to rescue the nation’s worst-funded public-employee retirement system and restore the credit standing of the nation’s fifth-largest state. The bulk of the plan’s $160 billion in savings over 30 years will come from limits on annual cost-of-living allowances and raising the retirement age for some workers.

The retirees group seeks a court order declaring the bill unconstitutional and establishing escrow accounts to house pension funds withheld under the new plan.

State Treasurer Dan Rutherford was named as a defendant in the case. Matt Butterfield, a spokesman for Rutherford, didn’t immediately respond to an e-mail seeking comment on the complaint.

The case is Illinois State Employees Association Retirees v. The Board of Trustees of the State Employees’ Retirement System of Illinois, 2014-CH-00003, Circuit Court of the Seventh Judicial Circuit, Sangamon County, Illinois (Springfield).

To contact the reporter on this story: Karen Gullo in federal court in San Francisco at kgullo@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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