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Administration

Posted on: April 17, 2018

Village Right on Track for Pension Funding

On their April 11th broadcast, WTTW’s Chicago Tonight named Niles in a list of towns that, according to an academic analysis, could lose tax revenue due to pension funding issues. NBC Chicago conveyed a similar message during an April 18th news broadcast.  However, the Village is not in danger of losing tax revenue due to pension funding, thanks to careful and proactive action taken by Village leadership by way of their own Police and Firefighter's Pensions Funding Policy approved by the Board of Trustees in 2015. Having its own established funding policy and being on track for the State’s funding requirements by the year 2040 make Niles a leader in current best practices for pension funding.

The current issue reported by WTTW and NBC focused on pension contributions from the Village of Harvey to their Police and Firefighters pension funds. State statute requires towns to fund the minimum contribution of 90% of the actuarially required contribution. The Village of Niles chooses to follow a more stringent standard which specifies that pension funding for defined benefit pension plans should use 100% funding as determined by an actuary. If a municipality “shorts” their annual minimum contribution of 90%, the State can and will withhold state shared revenues (sales tax, income tax, local use tax, telecom tax). The state then sends the under-contributed amount directly to the pension funds. Niles continues to fund its pensions at 100% of actuarial-required contribution, safely above the 90% minimum, and so the Village is not in danger of having the State divert state shared revenues to the pension funds.

In the last five years, the Village has contributed over $27.6M to its Police and Fire pension funds in an effort to address the funding issues that it and so many other communities face. This amount is $12.0M more than the Village contributed to these funds in the prior ten years combined. This significant increase illustrates the Village’s commitment to addressing this issue.

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