TRUSTEES’ CORNER

Sgt. Brian E. Wright #1575, Trustee • Recording Secretary

Policemens

CHEVRONS – MARCH 2018

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.

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P.O. Thomas Beyna, Elected Trustee

Policemens

It was an outstanding year for the Fund on the investment side in 2017. The portfolio earned a rate of return of 17% and well exceeded our assumed rate of return of 7.25%. The assumed rate of return is the expected rate of return of our investments for actuarial valuation. The Fund grew by approximately $245 million, which represented strong investment results reduced by benefit payments, and the Fund currently has $2.7 billion in assets. On the downside, our Fund also has $10 billion of unfunded liabilities and a funded ratio of 22%. The City made their required payment to the Fund in 2017 and is required to make payments of $500 million this year, $557 million for 2019, and $579 million for 2020. The Fund has received approximately $200 million so far this year and contributions continue to come in as tax receipts are collected. The strong performance of our portfolio certainly helps meet our cash flow needs but we will not be able to invest ourselves out of our problem of being so poorly underfunded.

There was legislation recently proposed in Springfield that is of interest to the Fund. House Bill 4659 proposes the removal of the birthdate restriction, those born after 1966, and allows for those to be eligible at age 55 for a 3% COLA. Senate Bill 2525 proposes for those officers who retired after September 1, 1967 with 20 years of service and attains the age of 75 shall receive a 3% compounded COLA. These bills were recently proposed and updates on their progress shall be expected.

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Kenneth A. Hauser, Elected Trustee • President

Policemens

The year 2017 was a great year for the Pension Fund. The Fund value was at $2,664,498,390 on December 31, 2017, representing growth of 10% from the Fund value on January 1, 2017, which was $2,408,559,227. The performance of the Fund was 17% net over the period ending December 31, 2017. This is a strong endorsement of the Fund’s investment managers.

Actual tax receipts from the City of Chicago for 2017 were $453 million and the Fund will receive an anticipated amount of $500 million for 2018 which is in line with statutory requirements.

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Lieutenant Edward M. Wodnicki, Elected Trustee

Policemens

Pension Advisor is a publication of the Policemen’s Annuity and Benefit Fund. You will be receiving a copy to update you on the matters that affect your pension and the concerns of active police officers, retirees and widows that make up our membership. If you have a question about your pension or the Fund, or, if there is a particular issue you would like to see addressed, please feel free to send a note to:

POLICEMEN’S ANNUITY AND BENEFIT FUND
PENSION ADVISOR
221 North LaSalle Street – Suite 1626
Chicago, IL 60601