Thousands of Chicago police officers received an unwelcome letter from their pension fund this week: thanks to a payroll error spurred by officers’ latest contract, approximately 3,000 are required to cut a check to their pension fund, plus interest.
The Fraternal Order of Police, Lodge 7, which represents most rank-and-file cops, said it planned on filing a grievance over the error so that the city would have to pay that interest charge instead of workers.
The flub is hitting Tier 2 members of the Policemen’s Annuity and Benefit Fund of Chicago, those who started working for the CPD on or after Jan. 1, 2011. Those members make up roughly half of the more than 12,000 active members of the fund. Sworn officers contribute 9% of their salary to their pension, which is automatically withdrawn from paychecks.
PABF, in a letter to members, said the error was because of a “fiscal year discrepancy” with the city.
“This letter serves to inform you of a payment shortfall in your pension contributions,” the message from PABF Executive Director Kevin Reichart reads. “Due to a fiscal year discrepancy with the City of Chicago, the retroactive salary contract payment you received 1/1/2022 was counted by the City toward your 2022 annual salary cap.”
As part of the new contract for Chicago police officers approved by the City Council in late 2023, union members received a 2.5% base salary increase that applied retroactively to the start of 2022.
“The city did not withhold the correct 9% of members’ salary and duty availability pay for the required payment,” according to a post on the fund’s website.
Reichart did not respond to a request for comment, nor did the city’s Finance Department.
Per state law, the fund “must receive the required contributions,” plus 3% interest. Members are asked to sign a letter of acknowledgement and cut a check to the PABF for the salary cap correction.
Failure to pay up by Aug. 31 means that original amount — plus interest — would be withheld from pensioners’ annuity payments when they retire. The union says the charge for some members is as low as about $80, and for others as high as $1,300.
“I know nobody likes to get a bill, and it should have never happened,” FOP President John Catanzara said in a video posted to the union’s YouTube page Monday. He blamed “incompetence” in CPD’s Finance Department and chastised the pension fund for not bringing the issue to the members’ attention earlier.
The union will be filing a class-action grievance demanding the city pay the 3% interest charge “that the pension fund is looking to hammer our officers with,” Catanzara said.
Given that those workers paid state and federal income tax on those earnings, Catanzara said the city should also refund the equivalent of the taxes charged on that income.
“I don’t know where this all ends up. It’s pretty disappointing where we’re at with this department and this administration,” Catanzara said.
The PABF is among the lowest-funded city pension funds, with enough assets to cover 21.76% of its obligations through the end of 2022.
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jgorner@chicagotribune.com
