Page 34 - January 2021

Policemen’s Annuity & Benefit Fund of Chicago
BEYNA CONTINUED FROM PAGE 33
the Fund has already put the City on notice of the intent to intercept State grants if full 2020 funding is not received.
The pension funding crisis has been a problem for de- cades. As far back as 2007, the Commission to Strengthen Chicago’s Pension Funds was assembled to address the sig- nificant underfunding problem facing the four City pension plans. Specifically, the commission sought to address the shortfall that exists between the benefits promised to em- ployees and statutory contributions. One critical Commis- sion recommendation was for the City to provide actuarial determined funding for the pension funds. The actuarial funding method calculates the cost of future benefits based on several assumptions and determines the amount of fund- ing needed to meet those future benefits. The City will final- ly begin providing actuarial determined contributions to the Fund next year, with a ramp in payments to increase the funded ratio to 90 percent by the year 2055. The Fund is pro- jected to receive $737 million in contributions from the City in 2021, and if the City continues to make its contributions pursuant to the statutory requirement, the Fund will be on a path to solvency.
Although the Fund is severely underfunded, carefully ex- amine articles claiming that the Fund will be insolvent by
a certain year. Often the articles ignore the statutorily re- quired City contributions in their calculations and are there- fore very misleading. If the Fund ever did become insolvent, the City is still obligated to pay benefits on a pay-as-you-go system. We are not at that point, but actions taken now can have a substantial impact on our Fund. As we search for ad- ditional solutions, an influx of capital would be extremely beneficial to the Fund. One option to create this capital is for the City to issue pension obligation bonds. The Fund would also benefit from pension reform measures that many other public pension plans throughout the country have already adopted, such as a Tier 3 structure with a higher contribu- tion level, optional drop programs and optional 401(k) type plans. Along with ensuring that the Fund receives the City’s statutorily required contribution, these issues will be a pri- ority for the Fund going forward.
On behalf of the Fund, I would like to wish everyone a happy, healthy and safe New Year.
Trustee Tom Beyna is the elected patrolmen representative and has been an elected member of the pension board since July 2017. He has been a sworn member of the Chicago Po- lice Department since 1999. Contact Tom at 312-676-0401 or tbeyna@chipabf.org.
34 CHICAGO LODGE 7 ■ JANUARY 2021