Repeat after me. Pension benefits cannot be diminished or impaired, even if S&P wants it. Walk on by.

Yesterday, Greg Hinz reported that S&P “leaned on the Mayor” to cut COLA benefits in order to restore the city’s credit standing.

The other day the Mayor smartly walked back her earlier mixed-messaging about COLA cuts and constitutional changes to the pension protection clause.

S&P Global Ratings, according to Hinz, is telling the Mayor Lightfoot “to reduce the 3 percent annual compound COLA that about half of the city’s retirees now are scheduled to receive, perhaps by amending the Illinois Constitution.”

First of all, because it clearly can’t be said enough, pension benefits are not the cause of the pension debt.

The city’s pension problems go back over a quarter century when it began to decrease its contribution to the public pension systems.

Second. And it can’t be said enough. The Supreme Court of the state of Illinois has ruled that any diminishment of benefits is illegal.

Third. And it can’t be said enough. Even S&P Global Ratings can’t change contract law. That would puts the kibosh on retroactively taking away pension rights. Even with a change in the language of the Illinois Constitution.

As Amanda Kass commented when the Mayor misspoke to Crain’s last week:

Bottom Line.

Regarding the COLA:

 

6 thoughts on “Repeat after me. Pension benefits cannot be diminished or impaired, even if S&P wants it. Walk on by.

  1. First of all it is wrongly termed a ….cost of living allowance. It really is an automatic annual increase (AAI). Paid for benefit of 8 1/2% contribution monthly paid by employees. 6% toward pension and 2 1/2 toward AAI.

  2. Diminishment or impairment of pension benefits is illegal. Until it isn’t. The Age of Trump is showing the way to actually ruling by fiat and I believe we will, in fact, see a diminishment in our lifetimes just as soon as it comes to the attention to the ruling class that laws are only enforceable when the enforcers are willing to actually enforce it.

    1. Of course there are no guarantees. But we are not just victims or spectators in this story. Back in 2013 when all the union suits told us that the courts would never support us and that we should strike a bargain with Cullerton, we said shit no. And we won. and we were right.

  3. I don’t know why anyone is surprised by this. She telegraphed her feelings some time ago.
    Tried to keep it all hid prior to election………..and it worked.

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