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SUAA and attorney general reach agreement on pension reform delay

Tuesday, May 13, 2014

* From a late Monday press release…

Today the State Universities Annuitants Association and Illinois Attorney General Lisa Madigan reached a tentative agreement to postpone implementation of the State’s new pension law (PA 98-599).

The agreement is pending as it requires judicial approval before going into effect. The agreement delays implementation of the pension law until July 1, 2015. Specifically, the agreement protects SURS members currently eligible for retirement by allowing them to delay their retirement decision until the constitutionality of the new pension law is determined. It allows them to calculate their money purchase annuity based on the effective rates as of June 30, 2014 and allows them to avoid the skips in the annual increases if the changes to the pension are upheld. The agreement also ensures that any unnecessary pension contributions will be refunded.

* From WUIS

The SUAA request had also asked for a stay of the entire pension law, but instead of holding out for that or going through a protracted court battle, negotiated the deal with the attorney general. Those involved say time is of the essence in hopes of holding off a retirement wave they argue will harm the state’s schools through a loss of institutional memory. They say the State Universities Retirement System has been overburdened with members trying to understand how the pension law would affect their benefits, and without enough time to meet with each, people have been forced to make retirement decisions without the full scope of information.

The tentative agreement between the SUAA and the attorney general resolves problems stemming from what can be described as typo in the pension law affecting university workers’ so-called “money purchase plans.” The SURS board recently voted to interpret the law as if the typo were fixed, so as to not inadvertently further cut some university workers’ pensions.

But the SUAA deal also goes beyond that; it eliminates issues involving so-called “refunds” that would have meant some university employees would have taken big hits were they to stay on the school payroll; the original request for an injunction, filed May 2, cited a man who would lose $190,000 if he kept working rather than retire by July.

The deal would also allow retirement systems to temporarily ignores a key provision of the pension law which reduces by one-percentage point how much employees must contribute toward their retirement; under the terms workers will continue paying what they do now, so as to not create additional harm if the law is found to be unconstitutional. There are additional changes, that affect individuals under systems besides SURS.

* And in a related story

A coalition of labor unions on Monday asked a court in Springfield to prevent a new state law aimed at curbing Illinois’ public employee pension debt from taking effect next month until questions about its constitutionality have been resolved.

The legal filing in Sangamon County by We Are One Illinois came more than a week after a similar request was made on behalf of a group representing current and retired state university employees.

The pension law, approved by lawmakers and signed into law in December, sets a goal of wiping out the state’s $100 billion retirement debt within 30 years by reducing automatic cost-of-living increases for existing and future retirees while requiring workers to work longer before retiring.

“The pension theft bill must not be implemented before the courts have ruled,” Illinois AFL-CIO President Michael Carrigan said in a statement. The coalition includes the American Federation of State, County and Municipal Employees, the Service Employees International Union, the Illinois Federation of Teachers, the Illinois Education Association and other public worker unions.

- Posted by Rich Miller        

  1. - PublicServant - Tuesday, May 13, 14 @ 9:28 am:

    Well since the bill basically was an “everything but the kitchen sink” approach to seeing what will stick, I’d expect to hear from lawmakers who took that “agonized” vote in favor of the bill as having no problem with the requested stay.

  2. - Pete - Tuesday, May 13, 14 @ 9:36 am:

    “Today the State Universities Annuitants Association and Illinois Attorney General Lisa Madigan reached a tentative agreement to postpone implementation of the State’s new pension law (PA 98-599).”

    Does the AG have the constitutional authority to not implement laws that have passed the legislature and are signed by the governor?

  3. - Capo - Tuesday, May 13, 14 @ 9:43 am:

    What a mess. Still leaving May 31 because it is impossible to figure this mess out. Still don’t want to get caught on the wrong side of the June 1 effective day. Even if the stay is approved and a delay is granted the June 1, 2014 date may be material in a future court ruling. I’m not an expert on this but it’s certainly something to consider.

  4. - A guy... - Tuesday, May 13, 14 @ 9:53 am:

    If it’s legal (only responding to Pete’s query), it seems like a reasonable short term accommodation.

  5. - Anon - Tuesday, May 13, 14 @ 9:56 am:

    I don’t think the AG does, but they can reach an agreement with the plaintiffs and the Judge is the one that actually delays the implementation of the bill, or portions of it by entering the order.

  6. - Norseman - Tuesday, May 13, 14 @ 9:56 am:

    === Does the AG have the constitutional authority to not implement laws that have passed the legislature and are signed by the governor? ===

    The AG has the constitutional responsibility to represent the state. In this role, the AG has agreed to a position that can be implemented by the courts. It’s done all the time.

  7. - facts are stubborn things - Tuesday, May 13, 14 @ 9:57 am:

    If the state would just follow the law and pay for pensions that have been earned and make all changes to future employees there would be no need for any of this. A political solution continues playing out to solve a legal, ethical, and financial problem. It is all about how to keep power and continue being elected. Collectivly the people of Illinois have the government they deserve.

  8. - facts are stubborn things - Tuesday, May 13, 14 @ 9:58 am:

    Does this agreement with SURS pave the way for a larger agreement with SERS etc. ?

  9. - Shark Sandwich - Tuesday, May 13, 14 @ 9:59 am:

    Pete, note this phrase from the quoted article: “The agreement is pending as it requires judicial approval before going into effect.” Doe that answer your question?

  10. - VanillaMan - Tuesday, May 13, 14 @ 10:00 am:

    “We only enforce laws our lawyers say are real laws!”

  11. - Rusty618 - Tuesday, May 13, 14 @ 10:17 am:

    =Still leaving May 31 because it is impossible to figure this mess out. Still don’t want to get caught on the wrong side of the June 1 effective day.=

    Is was the understanding in my department that you actually had to retire by April 30 to meet the June 1 implementation, because of the time to get into the retirement system. This came from an SERS representative, and several in my department did leave at the end of April. Of course, this was all speculation that any court ruling would grandfather them in to the previous pension law.
    I would think that all of the pensions systems (excluding the Judges Retirement System who were not included in the reform) would be given any delays that are granted.

  12. - pension victim - Tuesday, May 13, 14 @ 10:19 am:

    real estate taxes up, less available deductions, cost of living up, pension theft, higher utility bills….everyone wants their money….Sorry, everyone wants my money!

  13. - Just Trying to Survive - Tuesday, May 13, 14 @ 10:30 am:

    Amazed that a 3% increase is thought to be the ultimate scam. My stylist just got a 13% increase since my last visit, my electric bill went up 6% and our homeowners insurance bill increased 21%. Who’s scamming who here? My 3% increase isn’t enough to cover all those private business raises.

  14. - skeptical - Tuesday, May 13, 14 @ 10:58 am:

    I’ve attended several retirement parties for persons who made their decision to retire based on what they were told at presentations about the money purchase calculation. When asked questions at these presentations, the SURS representatives sometimes responded by simply saying that the question was being studied by SURS attorneys and that an answer could not yet be given. People were forced to make life changing decisions without knowing the consequences. This is more than a mess - it is shameful to put employees in such a position. Can they now revoke their “irrevocable” election to retire?

  15. - Mouthy - Tuesday, May 13, 14 @ 11:25 am:

    Is this type of delay like on the 2%/4% insurance premium payments collected and waiting on an ISC ruling?

  16. - PolPal56 - Tuesday, May 13, 14 @ 11:45 am:

    Rusty & Skeptical:

    According to SURS, you can submit your retirement papers just a couple days before you retire - if you’re willing to go without a pension check for up to 90 days. It takes time to process the paperwork - that’s why your coworkers were told to get their paperwork in by the end of April - so they would have a paycheck in June and a pension check in July.

    Skeptical, actually, SURS folks can technically revoke retirement up to about six months after they retire. Of course, they have no job to go back to. But some people in these months worked out with their supervisors that they were putting in papers but would revoke if the law were stayed.

  17. - Anon - Tuesday, May 13, 14 @ 12:06 pm:

    I believe if you retire at the end of the month, the beginning of the next month becomes your retirement date. Therefore, if you wanted to avoid retiring on June 1, you needed to retire the end of April, not wait until May. So, to all of you who waited, good luck! —- it may not have done you any good.

  18. - Anon #2 - Tuesday, May 13, 14 @ 1:02 pm:

    Anon @1206, this is true for SERS only. Each system has different provisions. In SURS, you can basically retire as of any day, provided you are no longer working at your SURS employer.

  19. - PolPal56 - Tuesday, May 13, 14 @ 2:21 pm:

    Anon @ 12:06, when you file SURS retirement papers, you list your last day of work as the next-to-last day of the month, and your retirement date as the last day of the month.

    It all depends on what dates you put on the paperwork. You can retire within a matter of days - if you’re willing to scramble like heck and go without a paycheck OR pension check for a few months.

    NOTE: You WILL get back pay for the first two or three months of retirement. It just takes two to three months from the time you submit your retirement papers to when you receive your first pension check. That’s why everyone was pushed to file by the end of April, so there would be no gap in receiving checks.

  20. - Barry - Tuesday, May 13, 14 @ 8:25 pm:

    Now it is more confusing. I have been with SURS since 1987. Four (4) years ago I signed an “irrevocable” with my institution with understanding that I would get 80% (Money Purchase) as of 9/1/2014. However, I would get 74%, if I retire by 6/30/2014. I have not turned in any resignation letter yet, and I don’t know what to do. Just waiting to see what will come out of the court in the next few weeks.

  21. - RNUG - Tuesday, May 13, 14 @ 8:57 pm:

    - Barry - Tuesday, May 13, 14 @ 8:25 pm:

    Hopefully the judge will go along with the suggested delay. If that were to happen, it most likely would occur during the pension case scheduling conference on May 22.

    But that will just be the start of things. Even with an expedited schedule, I don’t expect us to see a ISC ruling for up to 1 1/2 to 2 years.

  22. - inslid - Wednesday, May 14, 14 @ 8:54 am:

    It is not easy to figure out what to do if there is a last minute stay of the pension law. It’ll depend on how long the stay is and whether it would protect those who retire between June 1 and the end of the stay: (1) Will the stay simply postpone the date of the pension law initiation, e.g., to some specific date in the future or until the IL Supreme Court rules on its constitutionality? (2) Will the stay protect those who chose not to retire before June 1, but do retire before the stay is lifted? 3) Will the stay be lifted with sufficient notice to retire before the law goes into effect? And 4)If the law is ruled constitutional, will the activation date go back to the original June 1, 2014 or will the activation date be the date of the end of the stay or the date of the eventual ISC ruling?

    The strongest motivation to retire May 30 is the possibility that the ISC might rule that the law is constitutional for current employees (because they are not yet receiving “benefits” as specified in the IL constitution), but unconstitutional for retirees (whose “benefits…shall not be diminished or impaired”)?

    RNUG your thoughts on these issues would be most welcome. Thanks!

  23. - Capo - Wednesday, May 14, 14 @ 9:02 am:

    Rusty618 - There are all kind of opinions out there regarding the “official retirement date.” I have heard of people retiring prior to May 1 because they were told or under the impression that your first retirement check had to be in hand before you were actually legally considered a retiree. I have found so many differences of opinion in regard to this that ultimately it was up to me to make a decision on what is best for me. I have found nobody including the retirement systems that can provide definitive answers probably because what was certain in past is now open to different interpretation under the new pension laws effective June 1. And as of now nobody knows with certainty how the supreme court will interpret this. As far as my interpretation if I leave May 31, I am retired. On June 1 I will not be an employee of the state and will begin receiving a pension.

  24. - Makandadawg - Wednesday, May 14, 14 @ 9:22 am:

    - Capo -
    So clearly stated from your perspective. It is the same for me. The true story here is of the many like you and me. Not the story being told by newspapers, legislators, governors and lobbyists.

  25. - RNUG - Wednesday, May 14, 14 @ 12:37 pm:

    - inslid - Wednesday, May 14, 14 @ 8:54 am:

    Right now, without seeing a judge’s order, it’s anybody’s guess. Other than personally believing the law truly is unconstitutional and should be ruled that way based on past cases, I’m just as confused about how things will be dealt with until the ISC settles it.

  26. - RNUG - Wednesday, May 14, 14 @ 5:18 pm:

    BREAKING: Court Grants Union Coalition’s Request to Stay Implementation of Pension Changes

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