Friday, July 1, 2011

State High Courts: Pension COLAs Can Be Cut Despite Constitution

Hot off

Colorado and Minnesota rule that pensions may be cut. Colorado's constitution had a pension clause, though not as strong as Illinois clause. Nevertheless, this is precisely what I warned about: the deepest cuts come by slashing away at the cost-of-living and capping at a "high" $106,000 amount (not so high in future dollars if you take inflation into account. Four percent inflation would cut the present value of that cap to less than $30,000 in a 36 year career! No matter how much you pay into the pension).

So far, the media has done no coverage on how the Illinois Supreme Court might rule on these issues. After all, the Constitutional language about "interstate commerce" was crystal clear until the New Deal: "interstate" meant "interstate"! But then it meant "anything that might possibly enter the stream of interstate commerce or indirectly influence it by not entering the stream of commerce." In other words, constitutional protections (of all kinds) ain't what they used to be.

If you plan on retiring with a State of Illinois pension, gird your loins for many more battles and join the SUAA. They not only lobby but keep you up to date in a way that no other group does.

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