Court Rejects Legal Challenge to Illinois Pension Consolidation

Link: https://www.ai-cio.com/news/court-rejects-legal-challenge-to-illinois-pension-consolidation/

Excerpt:

An Illinois Circuit Court judge has denied a lawsuit that sought to stop the consolidation of the state’s 650 firefighter and police officer pension funds, rejecting the plaintiff’s claims that a law enacting the move violated the state’s constitution.

In 2019, the Illinois General Assembly passed a bill that allows for the consolidation of 650 police and firefighter pensions in order to pool their funds into two statewide funds for investment purposes—one for police and one for firefighters. The move is intended to help improve the financial stability of the pension funds and ease pressure on local governments to raise taxes to fund those pensions.

However, in February 2021 18 police and firefighter pension funds, including active and retired members, filed a complaint against Illinois Governor J. B. Pritzker, who signed the bill into law. The lawsuit alleged that the consolidation violates two provisions of the Illinois Constitution: the pension protection clause and the takings clause.

The plaintiffs claimed that they had a contractual and enforceable right to exclusively manage and control their investment expenditures and income, including interest dividends, capital gains and other distributions on investments, which they said the consolidation infringed upon.

Author(s): Michael Katz

Publication Date: 27 May 2022

Publication Site: ai-CIO

Appeals panel: No pension benefits for ex-Chicago cop Anthony Abbate, convicted in videotaped beating of female bartender

Link:https://cookcountyrecord.com/stories/619782204-appeals-panel-no-pension-benefits-for-ex-chicago-cop-anthony-abbate-convicted-in-videotaped-beating-of-female-bartender

Excerpt:

A state appeals panel has ruled a Cook County judge was wrong to declare Anthony Abbate — a Chicago police officer convicted of a 2007 aggravated battery targeting a female bartender — remained entitled to his pension.

Cook County Circuit Judge Anna Loftus ruled in favor of Abbate in a lawsuit against the Retirement Board of the Policemen’s Annuity and Benefit Fund of the City of Chicago, which stripped Abbate’s pension following his conviction. Loftus determined the battery had no connection to Abbate’s service as a police officer and therefore couldn’t be used to invalidate his pension.

The Illinois First District Appellate Court ruled on the pension board’s appeal in an order issued Feb. 7. Justice Aurelia Pucinski wrote the opinion; Justices Michael Hyman and Carl Walker concurred. The order was issued under Supreme Court Rule 23, which may restrict its use as precedent.

…..

According to Pucinski, the pension board also said “Abbate used his position as a police officer to interfere with a criminal investigation into his own conduct at the bar” and cited testimony from a federal civil trial in which a jury found in favor of the bartender against Abbate and the city. The panel rejected Abbate’s arguments alleging the pension board failed to support its conclusions and selectively included evidence.

…..

The panel further rejected Abbate’s argument it should only consider a specific section of the Illinois Pension Code, explaining it would consider other cases interpreting similar forfeiture provisions, such as those affecting the General Assembly, Illinois Municipal Retirement Fund members and others.

Author(s): Scott Holland

Publication Date: 7 Feb 2022

Publication Site: Cook County Record

Cities seek changes to disability pension laws as cops quit in droves

Link:https://minnesotareformer.com/2021/11/29/cities-seek-changes-to-disability-pension-laws-as-cops-quit-in-droves/

Graphic:

Excerpt:

Calling the current situation “fiscally unsustainable,” Minnesota cities will seek help from the state in covering costs of the skyrocketing number of police officers retiring due to post-traumatic stress and seeking workers’ compensation benefits.

The League of Minnesota Cities plans to push again in the next legislative session for a bill that would fully reimburse cities for the cost of insurance for police officers and firefighters on disability pensions, according to Anne Finn, a lobbyist for the group.

The number of cops and firefighters applying for disability pensions from the state retirement fund has exploded since the police killing of George Floyd in May 2020 that touched off widespread protests, riots and arson.

Since August 2020, about 80% of disability pension applicants say they can’t do their jobs due to post-traumatic stress disorder.

Author(s): Deena Winter

Publication Date: 29 Nov 2021

Publication Site: Minnesota Reformer

Senator Martwick At It Again, Leading Move To Increase Chicago Pension Liability By Billions – UPDATED – Wirepoints

Link:https://wirepoints.org/senator-robert-martwick-at-it-again-leading-move-to-increase-chicago-pension-liability-by-billions-wirepoints/

Excerpt:

Illinois State Senator Robert Martwick (D-Chicago) is pushing ahead with legislation that, according to a Bloomberg report, could increase Chicago’s police pension obligations by another $3 billion in total through 2055. An earlier city estimate put the cost at $2.1 billion. Senate Bill 2105 would do that by removing a birthdate restriction on eligibility at age 55 for a 3% automatic annual increase in retirement annuity.

Where would Chicago get money to cover the additional liability? No answers.

….

Chicago’s police and firefighter pensions already are in utterly abysmal shape, having just 18% and 23%, respectively, of the assets their actuaries say they should have. Together with two other pensions sponsored by the city, Chicago officially reports about $33 billion of unfunded pension liabilities. But using more realistic assumptions, Moody’s estimates the total unfunded liability at $60 billion. Moody’s also reports the city of Chicago’s total debts as a percentage of annual revenues are at 735%, the highest of any major city in the country.

….

It’s as if Martwick is saying, “We rob banks routinely so you might as well make it legal for us to rob banks.”

Author(s): Mark Glennon

Publication Date: 28 Jan 2022

Publication Site: Wirepoints

Illinois downstate/suburban public safety pension gap increases

Link: https://fixedincome.fidelity.com/ftgw/fi/FINewsArticle?id=202112211317SM______BNDBUYER_0000017d-ddd5-d418-a97d-fffffcde0000_110.1#new_tab

Excerpt:

The unfunded liabilities of Illinois? suburban and downstate public safety pensions rose to $13 billion in the last year of compiled results reported to the state, continuing a 29-year climb that underscores the deep strains on local government budgets.

The unfunded tab for the 295 firefighter funds and 352 police funds outside of Chicago grew to $13 billion in fiscal 2019 from $12.3 billion in 2018 and $11.5 billion in 2017. Police accounted for $7.5 billion of the total and firefighters for $5.5 billion, according to a new report from the state legislature?s Commission on Government Forecasting and Accountability.

The rising tab could help the Illinois Municipal League?s case in arguing for lawmakers during their 2022 session to loosen funding requirements.

The League wants a re-amortization of the funding schedule that would extend the target date for achieving 90% funding beyond fiscal 2040, and lower the funding target to 80% from 90%. While both would ease the burdens on governments market participants have warned they are Band-Aid fixes that don?t solve the underlying funding strains.

Author(s): Yvette Shields

Publication Date: 21 Dec 2021

Publication Site: Fidelity Fixed Income

This Local Pennsylvania Police Pension Fund Is About to Run Out of Benefits. How Did That Happen?

Link:https://www.ai-cio.com/news/this-local-pennsylvania-police-pension-fund-is-about-to-run-out-of-benefits-how-did-that-happen/

Excerpt:

But of all the struggling pension funds in Pennsylvania, the pension system in the city of Chester was shown to be the most underfunded municipal public pension plan in the entire state in 2019. And now, that situation has gone from bad to worse.

Reports say the pension will run out of money in less than four months, according to Philadelphia’s PBS station, WHYY. One of the primary reasons for this situation appears to date back to 2009, when the pension board adjusted the pension calculation procedure. These adjustments seem to have made it easier for some police officers to spike their pensions.

Under the 2009 change, police officer pensions in Chester were calculated using the salary of the final year of service, which may have encouraged some officers to work overtime as much as possible in their final year in order to inflate their pensions, according to the state’s appointed receiver. In October 2021, this rule was changed so that calculations will now be based upon the last three years of service. 

This one-year policy, combined with the practice of spiking among approximately 80 police officers, appears to be the cause of the pension system’s lack of funding. Officials are hoping to recoup some of the overpayments to retirees, and they are expecting future payments to be reduced significantly.  

Author(s): Anna Gordon

Publication Date: 10 Jan 2022

Publication Site: ai-CIO

Illinois Effort to Fix Ailing Local Pensions Faces Legal Hurdle

Link:https://www.bloombergquint.com/onweb/illinois-effort-to-fix-ailing-local-pensions-faces-legal-hurdle

Excerpt:

A court ruling as soon as this month will help determine the fate of one of Illinois Governor J.B. Pritzker’s key plans to ease the massive shortfall in local pension funds across the state. A 2019 law championed by Pritzker would merge about 650 local police and firefighter pensions with assets topping $16 billion into two funds to cut costs and improve returns.

….

The law set a June 30 deadline for the consolidation of the funds, but many of the local pensions are hesitating or even refusing to merge until they learn the outcome of litigation to block the combining. Three dozen current employees and retirees, along with 18 local retirement plans, filed a lawsuit in February in Illinois circuit court saying the consolidation violates the state constitution.

….

So far, however, the new Illinois Police Officers’ Pension Investment Fund hasn’t received any assets and expects to begin getting funds around March, said executive director Richard White. About 44% of the 357 downstate and suburban police funds that were supposed to be merged into the bigger pension plan haven’t even responded to requests for information, White said. 

Author(s): Shruti Singh

Publication Date: 2 Dec 2021

Publication Site: Bloomberg Quint

Chicago Police: Vaccine Mandates and Pension Threats

Link: https://marypatcampbell.substack.com/p/chicago-police-vaccine-mandates-and

Graphic:

Excerpt:

Both Chicago Police and Chicago Fire plans have active-to-beneficiary ratios of about 90%, and have been at that level for some years. Chicago Police, specifically, had such a ratio starting in 2012.

So, there are more people taking police pensions than are active employees already. If I take the numbers given, and shift 38% from active to beneficiaries, that gives one an active-to-beneficiary ratio of 52% (assuming you don’t get new actives, which you would, but still… this is a point-in-time estimate).

Author(s): Mary Pat Campbell

Publication Date: 21 Oct 2021

Publication Site: STUMP at substack

Chicago police vaccine mandate: New CPD memo threatens discipline, firing for non-compliance

Link:https://abc7chicago.com/chicago-police-vaccine-mandate-department-fraternal-order-of-fop/11138418/

Graphic:

Excerpt:

 A second memo, obtained by the I-Team, was distributed throughout CPD Sunday. The latest memo threatens the firing of officers who do not follow the city’s vaccine policy and orders it be communicated to officers at all police roll calls.

“TO BE READ AT ALL ROLL CALLS FOR SEVEN (7) CONSECUTIVE DAYS. This AMC message informs Department members of consequences of disobeying a direct order to comply with the City of Chicago’s Vaccination POlice issued 8 October 2021 and being the subject of the resulting disciplinary investigation. A Department member, civilian or sworn, who disobeys a direct order by a supervisor to comply with the City of Chicago’s Vaccination Police issued 8 October 2021 will become the subject of a disciplinary investigation that could result in a penalty up to and including separation from the Chicago Police Department. Furthermore, sworn members who retire while under disciplinary investigations may be denied retirement credentials. Any questions concerning this AMC message may be directed to the Legal Affairs Division via e-mail,” the memo said.

…..

“Roughly 38% of the sworn officers on this job, almost 40% can lock in a pension and walk away today,” Fraternal Order of Police President John Catanzara, Jr. said.

Author(s): Michelle Gallardo, Chuck Goudie

Publication Date: 18 Oct 2021

Publication Site: ABC7 Chicago

NYPD unions to pull out of pension fund group, Comptroller Stringer urges them to reconsider

Link: https://www.nydailynews.com/news/politics/new-york-elections-government/ny-nypd-unions-pull-out-pension-fund-group-20210920-472g2q3jn5hr5hk2lhgtgitvia-story.html

Excerpt:

New York City police unions that hold partial control over how their members’ pension money is invested are planning to pull out of a consortium of other city pension funds that Comptroller Scott Stringer has credited with considerably augmenting their return on investment.

In 2015, Stringer launched what’s come to be known as the Common Investment Meeting, where the trustees of the city’s five largest union pension funds meet to hash out how their money is managed.

…..

According to Stringer, the CIM has boosted the pension funds’ growth overall, with their rate of return hitting 11.58% over the five years since the CIM was created, compared to a 7.02% rate of return for the five years prior to its creation.

The police pension funds’ trustees are made up of several police unions. The most powerful among them is the Police Benevolent Association.

The PBA’s head, Patrick Lynch, pointed out that the CIM began as a pilot program and disputed the idea that, over the past five years, it’s made life easier for the funds’ trustees.

Author(s): Michael Gartland

Publication Date: 19 Sept 2021

Publication Site: NY Daily News

Chicago Police Pension Forensic Audit Ends With Disturbing Findings

Link: https://www.forbes.com/sites/edwardsiedle/2021/09/03/chicago-police-pension-forensic-audit-ends-with-disturbing-findings/?sh=18a0d9717c0c

Excerpt:

This week, the Chicago Police Department Pension Board Accountability Group—comprised of retired and active Chicago police officers and their dependents— released the scathing findings of a forensic audit of the Chicago Policemen’s Annuity and Benefit Fund. The Group hired an outside expert to conduct the forensic audit after the pension refused their request to do so on its own.

…..

According to a lawsuit filed this week by Tobe, the pension denied most of his requests for records under the Illinois Freedom of Information Act. It’s no secret that state and local government pensions—which are supposed to be the most transparent of all pensions—are regularly criticized for opposing public record requests, particularly related to alternative investment documents.

The report accuses the pension of failing to monitor and fully disclose investment fees and expenses.  It is estimated that fees and expenses could be 10 times greater than the $7.4 million disclosed in the pension’s most recent financial audit.  Tobe believes the fees related to dozens of investment managers are not properly disclosed. Using assumptions from an Oxford study, Tobe estimated that undisclosed fees could be as high as $70 million a year. Also, $2 million to $3 million a year in investment fees may have been paid to Wall Street for doing nothing, i.e., fees on committed, uninvested capital

Author(s): Edward Siedle

Publication Date: 3 Sept 2021

Publication Site: Forbes

Virginia Public Pensions Make a Direct Bet on Cryptocurrencies

Link: https://finance.yahoo.com/news/virginia-public-pensions-direct-bet-163646280.html

Excerpt:

The Fairfax County Police Officers Retirement System and Fairfax County Employees’ Retirement System are planning to invest, pending board approvals, a total of $50 million in Parataxis Capital Management LLC’s main fund, which buys various digital tokens and cryptocurrency derivatives.

The outlays come on the heels of the Fairfax funds — which together manage about $7.15 billion — investing several times in Morgan Creek Asset Management funds, and, earlier this year, in crypto venture firm Blockchain Capital. While some of these investments ended up going into coins like Bitcoin, the majority was invested into technology startups, so Fairfax considered them venture-capital investments. Parataxis, with its focus on actual coins, is different.

….

But that same volatility can lead to outsized returns, which have been one reason for Fairfax’s expanded investment. Molnar’s $1.95 billion police retirement fund was planning for 2% exposure to crypto via Morgan Creek and Blockchain Capital, but at the end of June crypto accounted for 7% of assets, due to appreciation, she said. Although Molnar couldn’t discuss exact appreciation, crypto “was not an insignificant contributor to performance” in the second quarter, she said.

Author(s): Olga Kharif

Publication Date: 10 September 2021

Publication Site: Yahoo Finance