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updated: 2/10/2014 3:12 PM

'13th Payment' used only to counter inflation

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Jake Griffin's Feb. 5 story characterized a retirement benefit paid by IMRF as a "bonus." It also implied this money was squandered and paid to former government employees when it could be used for other purposes. Untrue on both counts.

Local units of government provide various services. These employees receive a salary, a retirement program and, frequently, health insurance. This total compensation package is not unlike those in the private sector. Part of this package includes post-retirement benefit increases in recognition of the ruinous effects of inflation on retiree income.

The Daily Herald sliced and diced this benefit package to focus on one aspect -- the 13th Payment, which was enacted in 1992. It was negotiated by employee and employer groups to protect against inflation. The distributed amount varies with payroll -- going up and down.

The 13th Payment was enacted in a year when Social Security recipients received a 3.7 percent increase (bonus?). It also came on the heels of a 10-year period where Social Security recipients received an average annual compounded 4 percent increase (bonus?).

Mr. Griffin also implied the monies used were diverted from more important services the unit of government could provide. Units of government participating in IMRF can levy real estate taxes to fund retirement benefits for their employees. It is a restricted levy -- that is, the dollars levied to fund retirement benefits can be used only for retirement benefits. Old fashioned? Yes, but rational and tidy.

So, when is a bonus not a bonus? When it is used to fight inflation as part of a comprehensive compensation package. Retirees return this money to their communities. In 2012, IMRF pension payments generated $1.7 billion in economic activity in Illinois and helped support 12,344 jobs.

Louis W. Kosiba

Executive director

Illinois Municipal Retirement Fund

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