Thousands of Chicago police officers received an unexpected letter from their pension fund, delivering unwelcome news: due to a payroll error linked to the officers’ latest contract, approximately 3,000 individuals are now required to reimburse their pension fund, along with accrued interest.
The Fraternal Order of Police, Lodge 7, representing the majority of rank-and-file officers, announced plans to contest the error by filing a grievance, urging the city to assume responsibility for the interest charges instead of burdening the officers.
The error primarily impacts Tier 2 members of the Policemen’s Annuity and Benefit Fund of Chicago, comprising those who joined the CPD on or after January 1, 2011, constituting roughly half of the fund’s over 12,000 active members. These officers typically contribute 9% of their salary to their pension, automatically deducted from their paychecks.
In a communication to members, the PABF attributed the error to a “fiscal year discrepancy” with the city, revealing that a retroactive salary contract payment issued on January 1, 2022, was mistakenly counted by the city toward the annual salary cap for 2022.
Under the terms of the new contract ratified by the City Council in late 2023, union members received a 2.5% base salary increase retroactive to the beginning of 2022. However, the city failed to withhold the correct 9% of members’ salary and duty availability pay for the requisite payment, according to the fund’s website.
As per state law, the fund is mandated to receive the outstanding contributions along with a 3% interest charge. Members have been requested to acknowledge the shortfall and remit payment to the PABF for the salary cap adjustment.
Failure to comply by August 31st will result in the original amount, plus interest, being deducted from pensioners’ annuity payments upon retirement. The union asserts that individual charges range from approximately $80 to as high as $1,300.
In response, the union intends to pursue a class-action grievance, demanding that the city cover the 3% interest charge imposed by the pension fund. Additionally, Catanzara advocated for reimbursement of equivalent taxes on the affected income, given that officers had already paid state and federal taxes on those earnings.
