This week, thousands of Chicago police officers got an unpleasant letter from their pension fund: because of a salary mistake caused by the new contract, about 3,000 of them need to send a check to their pension fund, plus interest.
Most regular cops are represented by the Fraternal Order of Police, Lodge 7. The lodge said it was going to file a claim over the mistake so that the city would have to pay the interest charge instead of the workers.
Tier 2 members of the Policemen’s Annuity and Benefit Fund of Chicago are affected by the mistake. These are people who started working for the CPD on or after January 1, 2011. The fund has more than 12,000 current members, and these people make up about half of them. Officers of the law put 9% of their pay into their pension, which is taken out immediately from their paychecks.
In a message to its members, PABF explained that the mistake was caused by a “fiscal year discrepancy” with the city.
The message from PABF Executive Director Kevin Reichart says, “This letter is to let you know that you have not made enough pension contributions.” “Because of a mistake with the City of Chicago’s fiscal year, the backdated salary contract payment you got on January 1, 2022, was added to your 2022 annual salary cap by the City.”
The City Council passed a new contract for Chicago police officers in late 2023. As part of it, union members got a 2.5% raise in their base pay that went back to the beginning of 2022.
The city did not take out the right 9% of members’ salary and job availability pay to make the payment, according to a website post for the fund.
Reichart and the city’s Finance Department both didn’t answer when asked for a statement.
A rule in the state says that the fund “must receive the required contributions” plus interest of 3%. People who are a part of the PABF are being asked to sign a letter of acknowledgment and send a check for the pay cap change.
Not making the payment by August 31 means that the original amount plus interest will be taken out of the retirees’ annuity payments when they retire. The group says that the fee can be as low as $80 and as high as $1,300 for different members.
It shouldn’t have happened, FOP President John Catanzara said in a video shared to the union’s YouTube page Monday. “I know no one likes getting a bill.” He said that the Finance Department of CPD was “incompetent” and scolded the pension fund for not telling the members about the problem sooner.
Catanzaro said that the union would file a class-action complaint against the city, asking them to pay the 3% interest charge that “the pension fund wants to hit our officers with.”
Since those workers paid both state and federal income taxes on their earnings, Catanzaro said the city should also give them back the same amount of money that they paid in taxes on their earnings.
“I have no idea what will happen next.” “This department and this administration are in a pretty bad spot right now,” Catanzara said.
The PABF is one of the city pension funds with the least amount of money in it. It has just enough assets to cover 21.76% of its debts until the end of 2022.
