Palatine presentation shows possible benefit of combining police, fire pension funds

  • Palatine likely would benefit from a task force recommendation that the state combine 649 suburban and downstate police and firefighter pensions, according to a presentation to the village council.

    Palatine likely would benefit from a task force recommendation that the state combine 649 suburban and downstate police and firefighter pensions, according to a presentation to the village council. Paul Valade | Staff Photographer, 2018

 
 
Updated 10/18/2019 4:34 PM

Palatine likely would benefit from a task force recommendation that the state combine 649 suburban and downstate police and firefighter pensions, according to a presentation to the village council.

Suburban and downstate police and fire plans have an average of just $22 million in assets per fund, compared with $16.9 billion for each of the six state retirement funds, according to a report from the Pension Consolidation Feasibility Task Force. Gov. J.B. Pritzker initiated the state task force.

 

On average, the 649 funds are 55% funded. Combined, they have a total unfunded liability of $11.5 billion.

By consolidating them into two funds -- one for police and another for firefighters -- task force members said as part of their recommendation last week that the new funds could generate between $820 million and $2.5 billion in additional earnings in just the first five years, assuming they earn at roughly the same rate as the large Illinois Municipal Retirement Fund.

Palatine Village Manager Reid Ottesen's presentation this week on the potential for large fire and police pension pools was modeled on typical returns for IMRF, which serves about 3,000 government agencies across the state and has 420,000 members.

If Palatine's public safety pensions had higher cumulative returns similar to IMRF over a 13-year period, Ottesen said, Palatine's police funding would have been at 80.8% instead of 62.6% in 2017, with fire at 92.5% rather than 59.9%.

Ottesen said that while the public safety pension funding problem was not created overnight, the task force's work is a good initial step.

"I want to -- actually coming out of my mouth -- applaud the state and the task force for what they're doing," Ottesen said. "I think it's a tremendous start toward righting a system. It still doesn't address some of the core issues with the compounding and defined benefit versus defined contribution."

by signing up you agree to our terms of service
                                                                                                                                                                                                                       
 

Mayor Jim Schwantz endorsed the idea of Ottesen sharing the Palatine fire and police pension report with state lawmakers representing the village. Other suburbs plan to do the same, Ottesen said.

Illinois has the second-largest number of public employee pension plans, behind Pennsylvania, according to the task force.

Administration costs for the 659 local fire and police plans are much higher than for IMRF or others serving the entire state. The task force report says fire and police plan consolidation could cut those expenses by at least $14 million per year.

0 Comments
                                                                                                                                                                                                                       
 
Article Comments
Guidelines: Keep it civil and on topic; no profanity, vulgarity, slurs or personal attacks. People who harass others or joke about tragedies will be blocked. If a comment violates these standards or our terms of service, click the X in the upper right corner of the comment box. To find our more, read our FAQ.