LEGAL THEFT AT OUR PENSION FUND
Over the years, as your pension fund trustee, I have written newsletters in an attempt to counter who I call the City Apologists, those that try to discount or discredit any genuine concern for our pension fund’s integrity. Many of you, after reading these newsletters, often ask me about the theft that occurs at our pension fund. It is a difficult question to answer, because one person’s idea of theft is quite different than another’s. To be certain, my idea of theft is different than the City Apologists. The line between right and wrong, stealing and not stealing, corrupt or honest, has become a non-distinct, twisted, blurry line in Chicago. Generally speaking, wrong and illegal should be synonymous – when you hear “Joe Politician did something wrong” you shouldn’t have to also hear from the City Apologists when they say “Yes, but it was legal”.
The stealing at our pension fund is no different. There exists stealing and there exists legal stealing; the stealing at our pension fund is of the legal variety. But nevertheless, we should be appalled this legal stealing is taking place at the pension fund that sustains our retirement benefits. As an example, note the table below which illustrates the amounts the professionally licensed actuaries indicate the City should put into the pension fund and the amounts the City actually puts into the pension fund. The difference is rather astounding:
For those that don’t know, actuaries are exceptionally well trained professionals that apply long standing, time tested, financial principles to the demographics at our pension fund in order to come up with the actuarially required contribution (ARC) necessary to properly sustain our pension fund. There is very little controversy about the actuarial industry or what they do. The actuaries have no conflict of interest or professional interest in inflating these contribution amounts.
The City steals from us by contributing an amount substantially less than what the actuaries calculate each year. Instead, the City contributes an amount that has been determined by the State Legislature. The State Legislature writes legislation which, contrary to the prudent application of universally accepted financial principles, allows the City to legally contribute less than what the professionally accredited actuaries determine is required to secure benefit payments to retirees in the future.
So, is this stealing? Well, I think it is. It may be legal in the Illinois political sense, but it certainly should be viewed as stealing from the perspective of firefighters and paramedics. We were promised a very clear pension benefit, guaranteed by the Illinois Constitution and spelled out in legal terms in the pension code I administer as your pension fund trustee. The mechanics of funding our pension fund to secure those benefits are clear and noncontroversial. Each year the actuaries calculate the amount the City is required to contribute in order to secure our benefits. It is very much like the salary schedule found in our contract; there is little controversy or ambiguity as to whether or not a firefighter/emt (F1B) with two years on the job should get paid $82,842 a year. It is clearly stated in the salary schedule of our contract, just like our pension benefits are clearly written in the pension code. What would Local 2 do, if instead, the City decided to pay this two year firefighter/emt $50,000 rather than $82,842? I would hope the response from Local 2 wouldn’t be – “Don’t worry about it, it will work itself out”. Unfortunately that is exactly what Local 2’s response has been, year after year, as the City has neglected to pay what is required to secure our pension benefits.
Do not make the mistake, that because the resources the City is stealing from us isn’t required to be paid until later in your career, that it is somehow acceptable. Do not buy into the morally murky logic politicians engage in as they assemble in their echo chamber, shaking hands and putting our union dues in their pockets while writing legislation that harms our families’ financial security. And more importantly, hold your labor organization accountable and speak out against the continued support of these politicians, with our union dues, who continue to pass laws that make our retirement benefits less and less secure.
I can understand members not wanting to hear that their pension benefits are at risk. And it has become common practice, especially in the news media, to discredit information that doesn’t fit a prescribed narrative by attacking the messenger. I have tried my best to hold stakeholders accountable and provide accurate information that supports my analysis; and when I make a mistake, I have no issue with admitting it, as I have done in the past. But I feel a need to respond to the attempts to discredit my analysis by attacking me personally. It isn’t so much the slanderous attacks, it is the fact that it takes the membership’s attention away from the theft of our retirement security. I can assure every member of this pension fund, regardless of what some on the Local 2 Executive Board have suggested, that I have never filed for bankruptcy nor have I ever had my CPA license revoked. I stand behind my analysis and welcome anyone that wants to question it.
I understand I am at odds with some members of the Local 2 Executive Board and it is their prerogative to vote me off of the PAC and Legislative Committee. Afterall, I clearly stated my differences with the Local 2 Executive Board as they continue to use our union dues to support the Democratic Machine in this State. But I ask the membership to again look at the table above, and maybe even again next month so you don’t forget. This legal thievery should have been this Union’s focus, not playing footsies with a bunch of yet to be prosecuted criminals down in Springfield and City Hall. The membership needs to recognize this theft, and aggressively, without hesitation, pursue the resources necessary to secure what has been promised. Stay safe brothers and sisters!
Timothy McPhillips,
Pension Fund Trustee
This newsletter is my opinion only and clearly is not the opinion of the Retirement Board of the Firemen’s Annuity and Benefit Fund.
