CLARIFICATION AND UPDATES • by Sgt. Brian E. Wright #1575, Trustee
Retiree Health Care
The City Retirees lost their City subsidized health care plan through a court decision recently handed down. The court determined the City does not have a further obligation to subsidize the health care of city retirees, including our retired police officers. The Pension Fund also paid a portion of the health care premiums of our retirees, but said subsidy expired by statute on December 31st, 2016, and was not extended by further law or Court order. This means that the Pension Fund CANNOT pay the subsidy for police retirees or they would be in violation of the state statute.
Mr. Krislov, counsel for the retirees likes to lump the Pension Board into the same group as the City when referring to the health care fight. At no time have the sworn members of the Pension Board supported terminating retiree health care. Why would we? We are going to be retirees ourselves one day. The Pension Board instructed our counsel to not support the City’s position on retiree health care but to attend all court dates as an interested observer and report back to the Board. Our counsel did just that and we abided by the court decision and the expiring statute. The Pension Fund has no choice but to abide by all the provisions of the Pension Code. The Pension Fund cannot pick and choose what parts of the statute to follow. The statute does not allow for the continuation of the subsidy regardless of what Mr. Krislov may think.
City Pension Payment
The City actually paid what they were supposed to for 2016. The City paid $420 million. This is a significant increase from the roughly $210 million they paid in 2015. Our membership paid around $100 million for 2016. Our annual expenses were about $660 million. So, between City payments and our contributions, we received $520 million. This leaves the $140 million shortfall having to be made up by our investments. This requires an investment return of about 5.5%, which is very possible. This is good news for the fund. The needle is trending upwards for the first time in my tenure on the Fund. Next year, the City has to pay the Fund $464 million. As long as the City keeps up with their payments and we stay out of a recession, the needle will continue to trend upward. Fingers crossed….
SB 440 was overridden by the General Assembly and a 3% COLA was given to those born before January 1st, 1966. Said 3% COLA applies to every year of retirement after age 55 and it is not subject to the maximum increase of 30%. The Pension Fund has ordered our actuaries to prepare an impact statement on the passing of SB 440. The statement is not ready at the time of press. But, it is safe to say that the Fund will be able to afford putting another category of members on the same level as those before them. Eventually, once all Tier 1 participants have a 3% COLA, the extension of the COLA will cease because all that will be left are Tier 2 participants.
I wish everyone a Happy and Prosperous New Year!