On August 22, 2013 the Second District Appellate Court heard oral arguments in Edwards v. Addison Fire Protection District and the Addison Fire Protection District Firefighters’ Pension Fund. The Fire Protection District removed the plaintiff from duty as a firefighter due to a latex allergy. The plaintiff subsequently filed for a line of duty disability pension as a result of a latex allergy exacerbated by the cumulative effects of acts of duty. The Pension Board denied the application in its entirety. The trial court affirmed the Pension Board’s decision. PGM will post the court’s decision as soon as it is released.
The proposed framework would end automatic cost of living increases. Retirees would be entitled to annual increases based on half the rate of inflation. Additionally, in order to skirt constitutional protections against the diminishment of pension benefits, employees would pay 1% less towards their pensions as consideration for the proposed benefit reductions.
On August 16, 2013 Governor Quinn signed into law Public Act 98-391. P.A. 98-391 amends Section 4-114 of the Illinois Pension Code. If a firefighter dies leaving one or more minor children but no surviving spouse, the guardian of such child is now entitled to 20% of salary attached to rank until the child turns 18 or marries. If a pension fund is currently paying 12% of salary attached to rank to the guardian of a minor child of a deceased firefighter who left no surviving spouse, the pension board is required to increase the survivor’s pension prospectively beginning with the first pension payment on or following August 16, 2013.
Please contact PGM with any questions regarding P.A. 98-931.
On August 19, 2013 Michigan Attorney General Bill Schuette filed a Statement Regarding the Michigan Constitution and the Bankruptcy of the City of Detroit with the bankruptcy court. Attorney General Schuette agreed that Detroit is eligible for bankruptcy. However, Attorney General Schuette argued that Detroit cannot use Chapter 9 of the bankruptcy code to diminish or impair accrued vested pension rights and that doing so would violate the Michigan constitution and federal bankruptcy law.
August 19, 2013 was the deadline for Detroit’s creditors to file objections to Detroit’s bankruptcy petition. Detroit’s largest employee union and its two pension funds have filed objections. The two pension funds, the police and firefighters’ pension fund and the general retirement system, are Detroit’s two largest unsecured creditors. Detroit has until September 6, 2013 to file a response to the objections. The matter is set for an initial hearing on October 23, 2013.
In 2012 California passed a pension reform bill which raised employee pension contributions, increased retirement ages, and reduced pension benefits. However, California transit workers challenged the legislation under the Federal Transit Act. The Federal Transit Act allows the Department of Labor to withhold federal transit funding if a state impedes collective bargaining rights. So far the Department of Labor has sided with the transit workers in this matter and has withheld approximately $1.5 billion in transit funds.