POLICEMEN’S ANNUITY & BENEFIT FUND OF CHICAGO May 2015, No. 55

PENSIONADVISOR

Pension Advisor 1

As health insurance continues to be a very impor-tant matter for all members, I would like toremind all members of a few essential matters:

1) All insurance change requests must be in writ-ing, signed by the member. Currently, the BenefitsManagement Office of the City of Chicago requiresa 30-day cancellation notice, so please forward allinsurance change requests to the Fund offices atleast one month prior to the requested change. Asignature of the member MUST be included on therequest. The signature helps the Fund’s staffensure the authenticity of the request. Requestswithout a signature must be returned to themember and will ultimately delay processing.

2) Medicare changes and the related premiumchanges can only be made after the member sub-mits a copy of his or her Medicare card to theFund’s staff. The Benefits Management Officerequires a 30-day notice for any member in whichMedicare will be the primary coverage for him-self/herself and/or his or her spouse. As anexample, if a member will be eligible for Medicarecoverage effective July 1, 2015, the Fund’s staffMUST receive the Medicare card and a written sig-nature requesting the coverage change, by June1, 2015.

3) For any members currently receiving free cover-age, meaning coverage in which the employer con-tributes the full cost of coverage for the member

and his/her dependents, this coverage ends whenthe member reaches Medicare age, which is cur-rently 65. At that time, without proof of Medicareeligibility, the member will be charged the FULLCOST of coverage, which can be very expensive. Itis therefore very important that SEVERAL monthsprior to reaching Medicare age, each membermakes application for Medicare benefits and for-wards his/her Medicare card to the Fund’s staffas quickly as possible. As an example, if a mem-ber provides the Fund’s staff a Medicare card andchange request on July 20, 2015, that change willnot be effective until September 1, 2015. 30-daynotice is required, per direction of the BenefitsManagement Office!

We have heard that application for Medicare cardscan take as long as ten weeks, so please planaccordingly. The Fund’s staff cannot makechanges to coverage without a member’s Medicarecard and a change request. Thank you for yourcooperation with these deadlines as the Fund’sstaff works to effect all changes as quickly as pos-sible for all members.

EXECUTIVE DIRECTOR’S REPORT

Take time to appreciate the service and sacrifices made by Chicago’s Finest.

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By Lt. James Maloney, TrusteeI want to congratulate all our recent retirees. Mayyou enjoy a long retirement. The Chicago PoliceLieutenant’s Association Web Site is undergoingchanges, please be patient. All retired Lieu-tenants, contact Terry McMahon, our retiree rep-resentative and update your email and contactinfo for the Lieutenants Association, this is not forthe Pension Fund. retireerep@cpdlts.com

The Pension Fund has hired additional adminis-trative staff; we all look forward to working withthem and having them work with you.

Here are some numbers, as of this article:Retirees for 2014 were 350, the total retirees for2013 were 406 and for 2012 there were 570.

As of April 30, 2015, there were 12,109 swornofficers paying into the Pension Fund. This num-ber includes all title codes.

The Fund continues to work on a search for a newChief Investment Officer (CIO). We have a list ofhighly qualified applicants and we look forward tointerviewing them. I will continue in my role ofActing CIO until this process is complete. I workclosely with our Pension Consultant, New EnglandPension Consultants (NEPC) and also our Execu-tive Director, Regina Tuczak.

Many equity market managers continue to saythat emerging markets will outperform other equi-ty markets in the near term. Our Fund is wellpositioned to take advantage of this trend.

The Fund lowered the actuarial assumption inMar/2015 from 7.75% to 7.5%. This decision wasbased upon the recommendation of our Actuary-GRS and our pension consultant-NEPC.

The Fund is also in the middle of a fixed incometransition. We will be in a position to betterrespond to changes in global and domestic inter-est rates and other issues. We have hired someadditional managers in this space.

The recent Illinois Supreme Court decision,regarding changing Pension benefits and the StateConstitution was decided in favor of Public Pen-sions. We look forward to the future.

Next time you get your Real Estate Tax Bill, take alook at the breakdown percentage for the four Cityof Chicago Pension Funds, you will be surprised.Last summer was the first time that the tax billwas shown this way.

Myself and others have met with many State ofIllinois elected Representatives. We have answeredtheir questions and have also enlightened themon many issues relating to the Chicago Police Pen-sion. I am on a committee with the Illinois Public

Pension Fund Association (IPPFA). Our goal is toeducate and meet with elected State Legislators inregard to the health and preservation of our Pen-sion Funds.

As I have said in the past and I will continue tostress, it is extremely important for all of us to bein contact with our Representatives. Know whoyour Representatives are, meet them at their officeor email them.

THE TIME IS NOWby Sgt. Brian E. Wright, Trustee

Let’s all take a collective breath, we are going toneed it……..for a number of reasons. First, we arethrough election season (finally) and now knowwho will be our friends and enemies going forwardin the battle to retain our hard-earned pensions.Second, the Supreme Court will be ruling soon onthe constitutionality of Senate Bill 1. Lastly, weare about to enter the Spring Session of the Illi-nois General Assembly.

With the anticipated ruling by the Supreme Court,I believe the re-elected Mayor will be using it as acatalyst to introduce legislation to either re-amor-tize the payment (lessen the balloon payment duein 2016 and every year thereafter) or create newmethods of funding, such as a Chicago casino.While we do not know the exact plan of attack theMayor has, we do know that he is preparing oneto put into action immediately.

CHICAGO PUBLIC SAFETY COALITIONRecently, the union leadership of Chicago Policeand Fire have joined forces. All four ChicagoPolice unions: FOP Lodge 7, Chicago Sergeants,Chicago Lieutenants and Chicago Captains, alongwith the Chicago Fire union have formed theChicago Public Safety Coalition (hereinafter“Coalition”). The main focus and purpose of theCoalition is to stick together in the battle to retainour respective pensions. Services of a financialand political analyst have been retained to gatherand analyze data to combat the rhetoric and pro-posals brought by the City and state legislators toreduce our benefits. The Coalition will be organiz-ing the data and information that we want dis-seminated to the politicians, so that all speak with

Pension Advisor 2

TRUSTEES’ CORNER

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one voice and one unified message. The Coalitionhas decided to utilize this information to enlightenmembers of the City Council and State Legislatureas to how our pensions work, why they are sogrossly underfunded, and what can be done toremedy this going forward. Call your Alderman,State Representative and State Senator, especiallythe Alderman since they were recently elected andespecially, if they are first termers. This is thetime to get them in our corner before they turn tothe Dark Side.

The bottom line, and you have heard this before,the time is ripe for the Mayor to attempt changingthe law. He is going to cry broke and could have afresh Supreme Court decision that says he cannotreduce benefits which leaves the “only” alternativeto change funding. The increased ARC payment isdue in a little over a year (May 2016) and heneeds relief NOW. This upcoming Spring Sessionis going to be the most important time in the lastfive years for this Fund. The Mayor was just givenanother four years and is not afraid of politicalfallout right now. He is going to come with every-thing he’s got next Month, I hope we are ready!!

SUMMER COMMENTARYby P.O. Michael Lappe, Trustee

GREETINGS BROTHERS AND SISTERS!

I would like to think that we are off to an enjoy-able summer this year, fishing, swimming, base-ball, fully funded pensions, bar-b-q’s, wait aminute. Did I say fully funded pensions?

OK, I’ve been in the sun too long. Here’s what I’ve

been really thinking about as your trustee at theFund.

Every single day I answer calls from membersactive and retired. One of the disturbing issues wesomehow end up talking about is how will pen-sions be funded in the far away future? Currently,we know through an Illinois Supreme Court’srecent decision, confirmed that pensions cannotbe impaired or diminished. Locally here in thecity, the city’s lawyers will argue in an attempt tosomehow say the city’s mandated pension contri-butions may need to be adjusted. This is not forthe members benefit.

So let me address the far into the future fundingthat I just mentioned. As we all know, policing inAmerica has changed to give the criminal elementthe upper hand. There is no more pro-policing,meaning less and less street stops, keeping con-tact with the public at a bare minimum and stay-ing “under the radar” while at work, just to men-tion a few points. Technology as we know it today,has taken the incentive out of officers who mayhave dreamed of being the best copper out there.We had such a Nobel, honorable and courageousprofession. Back in the mid 80’s technology beganits hold on society. The lawyer sharks and liberalsbegan to diminish policing with one frivolous lawsuit after the other. Today, the media has blastedthe police in America as “thugs” and insist we arethe ones they say need to be retrained. I have astatement for the media, the self-righteous rev-erends and the self appointed community activistin this country. How about while you stand tall onyour pedestal preaching or politicking spewingyour own agenda, tell everybody in society nomatter where you may come from, no matter whatrace you may be, no matter your economic status,you need to BEHAVE YOURSELF!

The reality is; this will not happen. The day willcome when the pool of men and women with adesire to serve in the public sector as a sworn lawenforcement officer may dry up. Of our own CPDnew applicants, sadly, only 1/3 show up for theinitial power test. They will be asking themselves,do I really want to be a part of such a system thatI would put on a uniform of honor, only to be ver-bally and physically assaulted in unprovokedattacks? Do I really want to risk being a part of afederal lawsuit initiated by the Department ofJustice? Do my kids have to be taunted at schoolbecause mommy or daddy is on the front pagebeing accused of a civil rights violation? Do I wantto risk losing my house because a jury of thecriminal’s peers ruled in his/her favor for a bigtime payout of punitive damages? The media andpowers to be seem to forget that coppers arehuman also. This second guessing by repeatedlyplaying back a video and picking apart over a fourweek period the actions of a life or death decision

Pension Advisor 3

continued on next page

Sgt. Brian E. Wright

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we have to make each and every day is just anoth-er way those with the hatred and bias opinionslove to break down an officer and ultimately suethe employee’s agency for that big payout, even ifthe officer has been cleared and an event was jus-tified. Good luck finding another career. Themedia and the internet have now just crucifiedyou; just ask our brother in Ferguson, MO.

So I ask the question, who will be left to pay into afuture pension systems with such diminishingnumbers?

I had no intention of this article being a negative,but I can’t even drive home and listen to the radiowithout another police protest or more bad newsfor one of our brothers or sisters in another partof America that’s getting ugly. So please myfriends, wherever you may be when you read this,consider yourself lucky knowing your street daysare over and you survived. If you’re active, forGod’s sake don’t let your guard down.

All the best to you from the Pension Trustees andthe administrative staff here who strive to serveyou each and every day.

HEALTHCARE UPDATES AND MOREby Kenneth A. Hauser, President

Attorney Clinton Krislov sent me the followinginformation that I would like to report to you:

On February 25, 2015, the Seventh Circuit ruledthat our State Constitutional claims to permanenthealthcare benefits belong in the State Court andremanded the case back to the Illinois StateCourt. Clint stated that the decision may seem abit begrudging in its tone but this is a huge victo-ry for us and this round goes to us. He said thatwe will be beginning again in the Circuit Court of

Cook County. While it is likely to be a more favor-able forum than the federal district court, the bat-tle is just beginning and the City has showndetermination to fight this to the end. He believesthis to be a huge victory for us, “that the battlenow returns to the field in which we actuallymight win”. I surely hope he is right because Idon’t have confidence in the Cook County CourtSystem. He said we will appear before Judge Mar-tin on April 23, 2015, to get the case moving for-ward. We are now again at the beginning of whatwill be a long battle, I’m sure.

Attorney Clinton stated he filed a Motion to forcethe City to audit and reconcile your premiumcharges to the actual healthcare costs for the lasthalf of 2013. The City is now overdue in filing itsresponse. This motion extends the Korshak Rec-onciliation Act from July 1 to December 31, 2013whereas to receive a refund on our premiums.

The total number of active police officers makingmonthly annuity contributions to the PensionFund is 12,073 as of March 15, 2015. This breaksdown to 2767 females and 9306 males. The totalnumber of police officers hired during 2014 was315 of which 68 were female and 247 were male.The total number of police officers who left thePolice Department during 2014 was 431. Of the431 police officers, 8 officers died, 3 officerswere discharged, 7 probationary officers weredischarged, 63 officers chose to resign without apension, and 350 officers completed their careerand retired with a pension. The rank breakdownof the 350 officers is 282 under the rank ofsergeant, 48 sergeants, 11 lieutenants, 3 cap-tains and 6 exempt ranks. The total number ofofficers on disability is 329, which breaks downto 233 on duty disability, 47 on ordinary disabili-ty, 34 on occupational heart disability and 15 ontotal and permanent disability. The breakdown ofactive officers (12,073) will not be exact because Iam not listing every position. Totals of eachrank/position are approximate: 9497 Patrolman,815 Detectives, 1140 Sergeants, 197 Lieutenants,31 Captains, 36 Commanders, 5 Chiefs, 14Deputy Chiefs, 16 Canine Handlers, 64 EvidenceTechnicians, 42 Explosives Technicians, 29Marine officers, 22 Mounted officers, 110 PatrolSpecialists and 21 Traffic Specialists. A total of12,514 annuitants are receiving approximately$55 million in benefits monthly from the PensionFund as of March 2015. 9342 are retired policeofficers and 3,172 are widows/widowers. For themonth of February, 2015, the average retiree was56 years of age with 26 years and 4 months ofservice.

I have some information of interest for you:

(a) Apple is in, AT&T is out. The 30 components ofthe Dow Jones Industrial average after Applereplaces AT&T on March 19, according to S&P

Pension Advisor 4

P.O. Michael Lappe

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Pension Advisor 5

Dow Jones Indices: 3M, American Express, AppleBoeing, Caterpillar, Chevron, Cisco Systems,Coca-Cola, DuPont, ExxonMobil, General Electric,Goldman Sachs, The Home Depot, Intel, IBM,Johnson & Johnson, JPMorgan Chase, McDon-ald’s, Merck, Microsoft, Nike, Pfizer, Procter &Gamble, Travelers, United Health Group, UnitedTechnologies, Visa, Verizon, Wal-Mart, Walt Dis-ney. The last big Dow shake-up came in Septem-ber 2013, when Goldman Sachs, Nike and Visaknocked out Alcoa, Bank of America and Hewlett-Packard;

(b) foreign ownership of U.S. stocks totaled 16% in2014, the highest in 69 years, according to aGoldman Sachs report. Britons and Canadians ledthe way. According to Bloomberg, of the 2,400hedge funds that make up the Bloomberg GlobalAggregate Hedge Fund Index, only 22 managed tobeat the S&P 500 in 2014;

(c) China has more smartphone users than theUnited States has people. Barclays estimates thathalf of the population of China now has a smart-phone, and that 350 million were sold in Chinalast year;

(d) CBA (FOP collective barraging agreement) sec-tion 25.3 “ambulance fees”. Officer and their eligi-ble dependants and retirees and their spouses willbe exempt from fees for emergency medical ser-vices performed by the Chicago Fire Department.

Attention All members, Active, Retired and Surviv-ing Spouses; As life events occur, relocations,marriages, births, deaths, divorce, etc. you shouldkeep the Pension Fund updated of any and allchanges. This is to assure you received news,updates and/or tax forms in a timely fashion.

As a reminder, the meetings of the RetirementBoard trustees are always open to the public. Weappreciate the interest and welcome all attendees.For a schedule of meeting dates please visit ourwebsite at www.chipabf.org

REMEMBER

Kenneth A. Hauser

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POLICEMEN’S ANNUITY & BENEFIT FUNDCITY OF CHICAGO221 NORTH LASALLE STREET • SUITE 1626CHICAGO, ILLINOIS 60601

John C. Avila, Trustee,Appointed Member

Carole L. Brown, Trustee,Chief Financial Officer,City of Chicago, Appointed Member

Carol Hamburger, Trustee, Managing Deputy Comptroller,City of Chicago, Appointed Member

Kenneth Hauser, President,Elected Member

Michael K. Lappe, Trustee,Elected Member

James P. Maloney, RecordingSecretary, Elected Member

Kurt A. Summers Jr., Trustee, City Treasurer,Appointed Member

Brian E. Wright, Vice President,Elected Member

221 N. LaSalle St., Suite 1626Chicago, IL 60601Telephone: 312-744-3891(outside 312)Toll Free: 1-800-656-6606

Regina TuczakExecutive DirectorJames A. DollardComptroller

Sonny PanaliganAssistant Comptroller

Visit our websiteat: chipabf.org

RETIREMENT BOARD

POLICEMEN’S ANNUITY AND BENEFIT FUND OF CHICAGO

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

POLICEMEN’S ANNUITY AND BENEFIT FUNDPENSION ADVISOR

221 North LaSalle Street – Suite 1626Chicago, IL 60601

OFFICE HOURS: 8:30 A.M. – 4:30 P.M. MONDAY – FRIDAY

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