TRUSTEES’ CORNER

CHEVRONS – March 2018 • by Sgt. Brian E. Wright #1575, Recording Secretary

Policemens

As of now, we have roughly 1,000 more pension payments than active members. Those pension payments include regular annuities (9,901); widow’s annuities (3,118); disability payments (279); and child’s annuity and child’s disability payments (318). The total number of payees from the fund is 13,616 as of February 28th, 2018. We have approximately 12,660 active officers paying into the fund through the February 15th, 2018 payroll. This means we are paying more people than are paying into the fund by 956. This is a trend that is most likely to continue going forward for a number of reasons.

As we are currently in contract negotiations, we should be mindful of our demands and how they affect the pension fund. Health care for those 55 years of age and older is a great individual benefit. But it may be harmful to the overall health of the fund. Those officers that leave at 55 may have stayed until 60. Thus, an officer making $100,000.00 would take an annuity of $75,000 five years earlier. That totals $375,000.00 over five years. Plus that same officer would have put into the fund another $9,000.00 per year, totaling another $45,000.00 over five years. The total cost to the fund would be $420,000 over five years. That is one officer, so you can see how those numbers can be harmful to the fund depending on how many officers leave at 55.

On the other hand, there are those officers that stay after age 50, when they are vested and can take an annuity, until age 55 because of the health care benefit. So those two elements can be argued as a wash. We keep more officers after age 50 that could retire, but lose those at 55 that would have stayed longer. However, a pension can be drawn at age 50. So if we are trying to lower the number to age 50 for health insurance benefits, we may want to think twice. There would be no incentive to stay after age 50 if an officer could collect an annuity AND have health insurance. This would result in even more officers leaving at age 50 than ever left at age 55.

There were a few bills introduced in Springfield that act as pension enhancements to our fund. One removes a birthdate restriction on the 3% COLA. One starts compounding COLAs for annuitants at age 75. And the last opens up prior service purchases on cases that have already been decided. Our fund is not in great financial shape as we know all too well. Thus, now is not the time to introduce bills that are going to cost us even more money. I think we can all agree that we just want the pension deal we signed up for when taking this job. To try and introduce pension enhancements when our funded ratio is hovering in the low 20% range seems a little reckless. Why don’t we at least get our funded ratio up over 50% and then maybe we can talk about some enhancements to certain categories of annuitants.

Introducing pension enhancements also tends to jeopardize our position when seeking funding for the fund. It is hard to encourage politicians to support a casino bill saying we are in dire need of funding when there are bills being introduced to give us even more benefits. The number one priority right now is to grow the assets of this fund and not deplete them even more by early retirements and pension enhancements. We should all get on the same page before we negotiate ourselves into insolvency.

Policemens

Sgt. Brian E. Wright, Elected Trustee • Recording Secretary
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