Chicago, Illinois – Chicago police officers are facing an unexpected financial burden following a payroll error linked to their latest contract. Approximately 3,000 officers have been notified by their pension fund that they need to repay contributions, along with interest, due to a mistake in salary calculations.
The Fraternal Order of Police, Lodge 7, representing the majority of rank-and-file officers, is planning to file a grievance over this error. Their aim is to shift the responsibility of paying the interest charge from the officers to the city.
The issue primarily impacts Tier 2 members of the Policemen’s Annuity and Benefit Fund of Chicago, consisting of those who joined the CPD on or after January 1, 2011. These members contribute 9% of their salary to their pension, deducted from their paychecks automatically.
According to the fund’s Executive Director Kevin Reichart, the error was the result of a “fiscal year discrepancy” with the city. The retroactive salary contract payment received by officers in January 2022 was mistakenly counted towards their 2022 annual salary cap.
A new contract for Chicago police officers, approved by the City Council in late 2023, included a 2.5% base salary increase retroactively applied to the beginning of 2022. However, the city failed to withhold the correct 9% contribution from members’ salary and duty availability pay for the required payment.
Failure to rectify this by August 31 will result in the initial amount, plus interest, being deducted from pensioners’ annuity payments upon retirement. The union estimates the charge for some members to be as low as $80 and as high as $1,300.
FOP President John Catanzara expressed disappointment with the situation, attributing it to incompetence in the CPD’s Finance Department. The union plans to file a class-action grievance demanding that the city cover the 3% interest charge imposed on the officers by the pension fund. Moreover, Catanzara believes the city should refund the equivalent of state and federal income tax charged on the earnings in question.
As one of the city’s least-funded pension funds, the Policemen’s Annuity and Benefit Fund of Chicago currently has assets covering only 21.76% of its obligations through the end of 2022. This financial challenge adds to the complexities faced by Chicago police officers as they navigate their pension contributions and contract negotiations.