No Doomsday Approaching For Police Pension Fund
Two recent articles by a reporter from a publication that takes aim at public pensions, claiming the Chicago Police Pension will be broke by 2021.
Chicago City Wire reporter Michael McGrady sounded the alarm bell:
Without a taxpayer bailout, Chicago’s police pension fund won’t have enough money to pay benefits to retirees in 2021, according to a projection by Local Government Information Services (LGIS), which owns this publication.
This would bad news for the men and women in blue, for whom the promise of a decent retirement is a key factor in taking on such a dangerous, often thankless job.
However, McGrady is missing some important information.
The City contributions are not included in their figures. The article states that "without taxpayer subsidies,” more accurately referred to as the City's contributions to the fund, the fund would have dried up by 2015. What McGrady fails to recognize, for whatever reason, is the fact that in 2010, Public Act 96-1495 became the law in Illinois.
The statute required the City in 2016 to begin paying into the fund what is called an “Actuarial Required Contribution” (ARC) in amounts that would ensure that the Police Pension Fund be funded at a 90 percent funding level by the year 2040.
In 2016, another statute, Public Act 99-506, was passed that allowed the City to significantly defer its contributions to a 90 percent funding level by year 2055. The protections of having a sufficiently funded pension fund, at an affordable level for the City's taxpayers, is still in place. And the City has begun to meet those increased obligations this year.
A truly "independent analysis" can be obtained from the consultants at Gabriel Roeder Smith and Company, an institution that produces an annual actuarial valuation report on the Policemen's Annuity and Benefit Fund. This organization is unaffiliated with “doomsday scenario" publicists who back Gov. Rauner and his agenda to oppose some unions and public pension obligations.
The Chicago Police Pension Fund, for now, is sound and only the passage of bad legislation and another Wall Street breakdown can impact it to the point of causing some measure of concern for FOP members.