## Facts

- Illinois maintains multiple state-funded public employee retirement systems, including SERS, SURS, TRS, and GRS.
- The Illinois Constitution provides that membership in a public pension or retirement system is an enforceable contractual relationship and that resulting benefits may not be diminished or impaired.
- Facing a large unfunded pension liability and fiscal stress, the General Assembly enacted Public Act 98-599 (effective June 1, 2014) to reduce pension obligations, primarily affecting Tier 1 members (those who entered before January 1, 2011).
- The Act reduced automatic annual increases, increased certain retirement ages, capped pensionable salary, and changed benefit calculation formulas.
- Members and organizations representing members of four systems filed multiple suits challenging the Act on state constitutional grounds; the actions were consolidated.
- The circuit court held the Act unconstitutional in its entirety under the pension protection clause, permanently enjoined enforcement, and rejected the State’s police-power and reserved-sovereign-powers defense.
- The State took a direct appeal to the Illinois Supreme Court.

## Issues

1. Whether Public Act 98-599 diminished or impaired protected pension benefits for existing members in violation of the Illinois Constitution’s pension protection clause.
2. Whether a claimed fiscal emergency and the State’s police powers or reserved sovereign powers can justify legislation that diminishes or impairs pension benefits despite the constitutional prohibition.
3. Whether unconstitutional benefit-reducing provisions were severable so that some portion of the Act could remain effective.

## Decision

- The Illinois Supreme Court unanimously affirmed the circuit court.
- The court held that Public Act 98-599 diminished or impaired pension benefits for existing members and therefore violated the pension protection clause.
- The court held that the State could not rely on police powers, reserved sovereign powers, or a fiscal emergency to override an express constitutional limitation.
- The court held the unconstitutional provisions were not severable because benefit reductions were central to the statute’s purpose.
- The court declared the Act void in its entirety and left the permanent injunction against enforcement in place.

## Legal Principles

- Under the Illinois pension protection clause, public pension membership creates an enforceable contractual relationship, and the benefits of that relationship may not be diminished or impaired.
- The constitutional protection attaches upon membership; later statutory changes that reduce or impair promised benefits for existing members are prohibited.
- General police powers and fiscal necessity do not permit the legislature to contravene an explicit constitutional restriction.
- When a statute’s primary mechanism is unconstitutional and central to its overall purpose, severability will not preserve the remainder, even if the statute contains a severability clause.

## Conclusion

Illinois’s pension protection clause bars statutory reductions to pension benefits for existing members, and the State’s fiscal distress does not supply a constitutional defense; because benefit cuts were the statute’s core feature, the entire pension reform act was invalidated and permanently enjoined.


In re Pension Reform Litigation (Heaton v. Quinn), 32 N.E.3d 1 (Ill. 2015)