Police Pension Board Sees Increase in Fund Value

The five-member Police Pension Board held its quarterly meeting Wednesday, in the roll call room of the Morton Grove Police Department.

At 4:01 p.m., once the new pot of coffee was brewed, President and Deputy Chief Brian Fennelly called the meeting to order. All members of the board and village representatives were present.

First Quarter By the Numbers

Via conference call with Northern Trust Bank's Greg Williams, the board analyzed the pension fund’s quarterly performance, which included a value increase of more than $600,000.

The total value of the pension fund, as of March 31, 2011, was about $26.6 million.

The highest fund performers were the S&P 400 Index, which increased by 9.39 percent in the first quarter, and the Structured Small Cap Fund, which increased by 8.98 percent. 

Other investments and their returns, include the All Country World ex-US Index Fund (3.42 percent), the S&P 500 Index Fund (5.95 percent) and the Intermediate Government Bond Index Fund (0.02 percent).

Reasons Behind Investment Policies

Fennelly noted that though the bond fund had the lowest rate of return for the quarter, “we have to invest based on statutory guidelines.”

For instance, Illinois law requires that 50 percent of the pension’s investments must be in fixed income products. In addition, the police personnel must contribute 9.91 percent of their base salary to the pension plan.

Throughout the years, these contributions have been maintained, according to Fennelly. The village government is required to contribute the remaining amounts necessary to fully fund the plan, which currently is underfunded.

Background on Police Pension Plans

The pension plan, which allows officers to retire at 50 with 20 or more years of service, provides for a pension that is equal to 50 percent of the salary of the rank the officer held on the day he retires.

An additional 2.5 percent is added for every year of service over 20, not to exceed 75 percent of the officer’s salary.

Legislation passed in the Illinois’ General Assembly increases the retirement age for new officers and makes other changes for incoming employees.

Fennelly believes they get the most services possible for the size of the plan and points out that contributions by the officers from their paychecks were always made according to their statutory obligations.

For this reason, he said he is deeply offended by a perception by some Morton Grove residents that the police mismanaged the fund, thereby causing the 20 percent increase in the tax levy in 2006, when for years the village failed to meet their obligations to the fund.

“I was shot on the job,” he said. “I could be making more money doing something else, but I don’t. I work here as a police officer. That’s the trade-off.” 

New and Old Members Joining Board

The meeting also acknowledged a new member, Dan Warrensford, the newly elected active duty police representative. He replaces Bob Zielinski, whose term expired and declined to run for reelection. Congratulations were offered to Joe Hedrick, one of the two civilian members of the board, who was reappointed by Mayor Staackmann.

The selection of the beneficiary slot was postponed until May 2, to allow time to receive more ballots through regular mail from the retirees and beneficiaries. Board members will be notified of the results by email.