[JURIST]
The Illinois General Assembly [official website] passed a bill [text, official results] on Tuesday that would reform the state’s pension plan to lower future benefits for current state employees. The legislature amended the pension plan in an effort to cut spending and lower the state’s debt, which currently includes about $100 billion in unfunded liabilities. The bill aims to reduce spending by lowering annual increases in pensions to retired individuals, which will now be based on the number of years worked. The We Are One [advocacy website] coalition and labor unions oppose the measure, arguing [CNN news report] that the cuts will hurt retired workers by eroding their benefits and eventually preventing retirees from being able to keep up with rising costs of living and inflation rates. Some labor unions have already stated [Reuters report] that they believe the bill violates a provision of the Illinois Constitution [materials] that prohibits decreasing pension benefits. The bill will be sent to Governor Pat Quinn [official website], who is expected [press release] to sign it into law.

Pension rights have been a controversial issue recently. On Tuesday a judge for the US Bankruptcy Court for the Eastern District of Michigan [official website] ruled [JURIST report] that the city of Detroit is eligible for bankruptcy [JURIST op-ed]. The insolvent city’s debt [JURIST op-ed] includes 3.5 billion dollars in pension funds. The bankruptcy was allowed to go forward despite a Michigan state court ruling [JURIST report] in July which held that the city’s filing for bankruptcy violated the Michigan Constitution [text]. The bankruptcy court held that the pension funds could not be treated any differently than other unsecured debt. In March the US District Court for the Southern District of New York [official website] denied [JURIST report] a motion to dismiss a lawsuit brought by a pension plan holder against JPMorgan (JPM) [corporate website; JURIST news archive]. The court found that sufficient allegations were raised to support a claim for breaches of both the duty of care and the duty of loyalty.