PENSION FUND ISSUES

The Funding Ratio. I have addressed this issue with the other Board members since I was elected two years ago. Dana Levenson, the former City of Chicago Chief Financial Officer and a former Trustee on the CPD Pension Fund, had given a speech in early 2006 regarding the state of all the City pension funds. He wanted to set up an open discussion with the Pension Fund Trustees, Directors and Representatives from the various Unions involved. The purpose of this meeting would be to discuss possible solutions and ideas to address the underfunding issues. This meeting never took place.

I have discussed our funding issues with Union members, CPD Pension Trustees, Trustees of other Pension funds and members of the investment industry. We need to implement a number of strategies combined to address the funding issue. The combined strategies that I have called for are: 1) Pension Obligation Bond, 2) Cash Infusion (possibly from the lease of Midway or other City Infrastructure deals), 3) Raise the contribution, and 4) Raise the City multiplier.

The CPD Pension Fund has recently sent a letter to the Mayor addressing our concerns.

Benefits have increased over the years, members can and usually do retire earlier, and with better healthcare fortunately we are all living longer. These issues also have an effect on the funding ratio.

We have all seen the volatility of the equity markets this year. The CPD Pension Fund has made some asset allocation changes to direct more investments into alternative strategies. These alternatives include Private Equity, Real Estate, Infrastructure and an increase in foreign equity investment. We along with our Pension consultants have been making more investments that are uncorrelated to the U.S Equity markets, in light of what has occurred recently in the U.S. markets, these were sound decisions and I expect them to be sound investments for the future.

Illinois Law does guarantee our CPD Pension benefits, however, and I am pro-active. I want to see and make changes today to increase the long term funding issue of the Chicago Police Pension

Lt. James Maloney
Pension Trustee
&
Vice President
Chicago Police Lieutenants Association