Unfair to cut pensions of retired city workers
MARK BROWN firstname.lastname@example.org May 8, 2012 10:36PM
Updated: June 11, 2012 9:21AM
Mike Underwood worked 30 years as a patrolman for the Chicago Police Department before retiring 10 years ago at age 52. During his career he was shot once, broke a leg on another occasion and suffered more broken ribs than he can count.
The $44,500 pension Underwood started collecting when he left the force now exceeds $52,500 thanks to annual 3 percent cost of living increases that started when he turned 55. He figures he earned it.
On Tuesday, Mayor Rahm Emanuel proposed suspending cost of living increases for all city retirees for the next 10 years as part of his plan to restore city pension funds to solid financial health.
Underwood was among the tens of thousands of city retirees you may have heard collectively yelling “Ouch.”
“It’s really going to hurt me to lose this 3 percent,” said Underwood, who calculates he’s already taking home less money than he did when he first retired because of steady increases in the cost of his health-care insurance premiums.
In targeting current retirees for part of the pain, Emanuel’s pension proposal went well beyond the already bitter medicine Gov. Pat Quinn prescribed last month for rescuing the state’s pension plans.
Quinn’s proposed benefit cuts would apply only to current and future state workers, not those already retired, and he only proposed reducing, not suspending, their cost of living increases.
By going as far as he did with his proposal, Emanuel raised not only legal issues, but to my mind, basic questions of fairness regarding the city’s responsibility to its retired workers.
I’m completely in favor of reining in the 3 percent compounded COLAs that are a major factor in bankrupting our public pension funds. I even support doing that with current employees, although the Illinois Constitution may hold otherwise.
But I don’t know how you do that to pensioners, many of whom aren’t in any position to re-adjust their lives to account for the broken promise.
To make his case for a 10-year “pause” in COLA payments, Emanuel used the example of a city employee who retired in 1995 with a pension of $60,000. That same retiree now collects $100,000 a year in payments because of those annual 3 percent compounded bumps, he said.
While mathematically correct, Emanuel’s example was misleading: a $60,000 city pension was a relative rarity in 1995.
Chicago police officers of that era would have been retiring with pensions closer to $40,000, pointed out Fraternal Order of Police President Mike Shields. In the police department, only the brass were receiving pensions in that higher range in those days.
Plus, contrary to other city employees, the 3 percent cost of living increase paid to police retirees born before 1955 is not compounded, Shields said, and those born after 1955 receive only a 1.5 percent COLA.
In seeking out Underwood, I was looking for a real-life example of the effect of Emanuel’s proposal. Whether he makes a sympathetic case is for you to decide.
Underwood, who was born and raised in the city and still lives on the Northwest Side, would be the first to tell you his pension is a nice deal compared to many folks.
Still, he works a part-time security job to make ends meet, and as a former city employee, he’ll never be entitled to more than 40 percent of his normal Social Security benefit, which he doesn’t plan to collect anyway because that would limit how much he could earn working.
“I’ll never be able to retire,” Underwood said. “I’ll always have to work, which I don’t mind. I like working.”
During his police career, Underwood worked Town Hall, Area Six, Austin, Rogers Park and Jefferson Park. It was in Austin that he suffered most of those injuries.
“I did two tours of Vietnam, and I’ll tell you, Mark, working that Austin was worse,” he said.
Health insurance premiums now account for $704 a month deducted from his pension check, Underwood said.
“They give me the 3 percent with one hand and steal it back with the other.”
Some believe this is another example of the mayor’s bargaining approach: Take an extreme position and negotiate into the realm of the reasonable.
Mike Underwood, for one, doesn’t appreciate being used that way.