Pension craziness
Wednesday, Oct 12, 2011 - Posted by Rich Miller
* These stories about union leaders taking advantage of their positions and an obscure state law continue to make me sick to my stomach…
Among those in line to reap multiple pensions with the blessing of city pension fund officials is Liberato “Al” Naimoli, president of Cement Workers Local 76.
Naimoli retired in 2010 from a $15,000-a-year city job that he hadn’t worked at in a quarter-century. He now receives a city pension, based on his union salary, that pays him about $158,000 a year, more than any other annuitant in the city laborers’ pension fund.
In order to get that inflated city pension, Naimoli signed an application in 2009 that stated he was not receiving credit in any local union pension plan. Yet information obtained by the Tribune and WGN-TV shows that the local has been sending pension contributions on his behalf to the union fund since 1977. He is now eligible to receive about $60,000 a year.
His second pension will come from the Laborers’ Pension Fund for Chicago and Vicinity, a plan established by hundreds of private employers as well as the Construction and General Laborers District Council of Chicago and Vicinity. The council is an umbrella group composed of nearly two dozen Chicago-area unions affiliated with the Laborers’ International Union of North America, or LIUNA.
Naimoli’s continued participation in the union pension plan has the blessing of Heiss and of James Capasso Jr., executive director of the city laborers’ pension fund. Years ago, Capasso was booted from another LIUNA affiliate for receiving contributions to the district council pension fund despite never holding a paid job with a union.
* And speaking of Capasso…
James Capasso Jr. walked into a union pension fund office in 2002, announced he was retiring from Laborers’ Local 1001 and applied for a pension.
The request was curious, considering Capasso had never held a paying job with Local 1001. In fact, he had been making more than $100,000 a year working full time as executive director of the Laborers’ Annuity and Benefit Fund of Chicago, a city pension plan with more than $1 billion in assets.
It turned out that dues from union members had been set aside for Capasso with the Laborers’ Pension Fund for Chicago and Vicinity as if he had been working for the local 30 hours a week for 18 years, union documents show.
The union pension fund eventually rejected Capasso’s pension request. But the episode raises serious questions about how a college dropout with no prior experience became the executive director of a city pension fund — and why he was allowed to keep that job after the laborers union threw him out for attempting to collect a pension he was not entitled to receive.
At the city pension fund, Capasso is the official who allowed employees of Local 1001 and other unions affiliated with the Construction and General Laborers’ District Council of Chicago and Vicinity to land inflated city pensions on top of their union pensions.
Ugh.
* From a press release…
As the Chicago Tribune and WGN-TV continue to uncover gross abuses in the Chicago’s pension funds, Illinois House Minority Leader Tom Cross (R-Oswego) filed legislation today to ensure that Chicago union officials cannot collect multiple pensions, one through the City of Chicago and one through other labor organizations for pension credit earned for the same period of service.
Rep. Cross filed House Bill 3832 to strengthen current law, because according to the news reports, some top union officials circumvented the law to allow double dipping in the Chicago Municipal Pension Fund and the Chicago Laborers’ Pension Fund.
“This is double-dipping on steroids—and it was meant to be illegal. Unfortunately, top union officials used a questionable interpretation of the pension law that allowed them to use a loophole in to grab two or sometimes three pensions,” said Cross. “This is a disgrace—and must be remedied immediately.”
The reports are slightly different than what were in the news last month when the Chicago Tribune and WGN reported that city of Chicago union bosses were double dipping a city pension with a union pension by falsifying their City pension applications—stating they were only receiving one pension, but were collecting both.
Current State law provides that the deliberate falsification of documents in an attempt to defraud a public pension system is a Class 3 felony, and a conviction for this type of fraud will disqualify the individual from receiving municipal pensions.
Even though Illinois law was violated, the union officials were allowed to keep their inflated City of Chicago pension as long as they disclaimed the union pension they had also been receiving. It was a decision by the Executive Director of the Chicago Municipal Fund to not go after the violators of the current statute.
- wordslinger - Wednesday, Oct 12, 11 @ 11:28 am:
The Trib and WGN have done a great job on exposing these cheap hustlers.
Sadly, they’ve also used these relatively small number of scamsters as weapons to threaten the millions — your friends, family members, neighbors and mine — who didn’t play a rigged game and have counted all their working lives on the relatively small pensions they’ve earned, fairly.
We’re all smart enough to distinguish between the gangsters and the real working stiffs.
- Anonymous - Wednesday, Oct 12, 11 @ 11:29 am:
To get to these levels of retirement benefit, a person would have to put away over $4k per month for 30 years with an 8% return. That’s like someone making 60-70k putting away their entire after tax salary for their entire career.
- farmhand - Wednesday, Oct 12, 11 @ 11:30 am:
Why should union officials, directors of association groups like the ones representing school boards, principals etc. Be allowed to pay into a public pension plan? This is nothing but criminal in my view.
- Leave a Light on George - Wednesday, Oct 12, 11 @ 11:34 am:
Just like the old commercial featuring I forget who “image is everything.” If these unions would ferret this stuff out on their own, express some outrage, and fix the problem perhaps the populace would be more on their side in the current pension crisis.
Same for Gov. Quinn and his curious personnel moves, appointments and big raises for his staff. If you had “fumigated” as promised them we might have some faith in your other moves.
- jacketpotato - Wednesday, Oct 12, 11 @ 11:40 am:
This is terrible and really screwing up the system for folks that put their money into the system. The Trib should be applauded for continuing to go after these abuses. I kind of wish they would go after CEOs as hard. The fact that Boeing’s CEO was paid more than the company paid in taxes is crazy.
http://www.nytimes.com/2011/08/31/business/where-pay-for-chief-executives-tops-the-company-tax-burden.html?hp
Boeing CEO, W. James McNerney, Jr. was paid about $13.8 Million.
One more thing, the sense of scale should be used on some of these pension abuses. Yes, they should be punished and kicked out. But compared to what some CEOs stole/lost (Countrywide CEO Mozillo, Citibank’s Charles Prince, etc), these amounts are just rounding errors.
- Downstate - Wednesday, Oct 12, 11 @ 11:43 am:
Hey. Everything is fine. It’s not that big of deal that these incidental amounts are paid out. They are a small portion of the overall amounts. Hence, we shouldn’t be bothered with this petty theft.
That’s what we’ve been told for too long.
Why can’t we get an amendment before the voters that would allow Illinois to take the pension provision (being untouchable) out of the state constitution?
- OneMan - Wednesday, Oct 12, 11 @ 11:44 am:
The big difference jacketpotato is that Illinois isn’t constitutionally bound to pay Boeing jack…
If you want to gripe about CEOs there is likely a thread for that or you can join a drum circle in the loop if you would like.
- Disgusting - Wednesday, Oct 12, 11 @ 11:45 am:
Disgusting. That’s all there is to say.
- Easy - Wednesday, Oct 12, 11 @ 11:47 am:
Jacket-
the difference is taxpayers are not paying the pensions of corporate ceos. We are paying for the pensions of these union double dippers. huge difference. If the shareholders of Boeing don’t like the very public compensation package of their ceo, they can change it. not the case with these hidden union double dippers.
- chi - Wednesday, Oct 12, 11 @ 11:48 am:
“Why should union officials, directors of association groups like the ones representing school boards, principals etc. Be allowed to pay into a public pension plan? This is nothing but criminal in my view.”
Actually, it’s the opposite of criminal. It shows people following the law to their advantage, same as everyone does, or should do. Whether the law is wise is a separate question, but these people are not criminals.
If you look past WGN’s grainy camera footage, fifty year old pictures of Tony Accardo, and claims that it is like a movie, you will notice that, among other things:
-The city did not make any contribution on behalf of any of these people once they left the city’s employ. The unions and/or the individuals made all the required contributions themselves.
-The Laborers Pension Fund is by far the most well-funded of the city pension funds and, in fact, was so well funded that the city decided to skip their contributions for several years, which is the only reason (including the economy) that the fund is currently not 100% funded.
-Part of the reasoning behind the law was to enable and encourage city workers to join the leadership ranks of the union- if not for protections like these or similar to these, it would be hard to recruit a city worker to forego his pension credits earned with the city in order to start over again by working for the union.
-These stories seemed oddly well-timed to ensure enough misdirected public outrage is created to enable the powers that be in Springfield to hurt the vast majority of pensioners and city employees that have nothing to do with this issue.
- Anonymous - Wednesday, Oct 12, 11 @ 11:58 am:
I will concur its not “illegal” but why should taxpayers have to pick up the tab?
- Colossus - Wednesday, Oct 12, 11 @ 11:59 am:
Chi, you make an excellent point about the law being followed, and I think this ties into Jacket’s point as well. These are both examples of individuals getting outsized compensation for their work by following the law in ways that are simply not available to the average person. While I don’t think this is the venue for a conversation about CEO conversation, I can see where it makes sense.
- Colossus - Wednesday, Oct 12, 11 @ 12:03 pm:
And Easy, the $25M incentive Boeing got to stay here? That’s the taxpayers picking up the tab for their CEO to make more than they paid in taxes. I guess this is more germain to the topic than I thought: Special folks at the top making out like bandits with backroom deals that break no laws and suck up taxpayer money.
http://archive.chicagobreakingbusiness.com/2010/09/wto-report-cites-illinois-tax-breaks-to-boeing.html
http://www.nytimes.com/2011/08/31/business/where-pay-for-chief-executives-tops-the-company-tax-burden.html
- wordslinger - Wednesday, Oct 12, 11 @ 12:09 pm:
–Actually, it’s the opposite of criminal. It shows people following the law to their advantage, same as everyone does, or should do. Whether the law is wise is a separate question, but these people are not criminals.–
You crack me up. What do you think, Chi? Is the law that allows these scams “wise?” How did the law come about, anyway?
Just a few law-abiding citizens exercising their rights. Nothing to see here.
You’re right about one thing. Your law-abiding thieves will be used as a club against honest pensioneers. Not that they care, obviously.
- OneMan - Wednesday, Oct 12, 11 @ 12:09 pm:
Colossus,
I would respond to you but me and the rest of the corporate elite are two busy lighting our cigars with $20 dollar bills…
Ironically these guys will pull down enough in their pensions to be part of the 1%, perhaps we should invite them too, since it is on the backs of union members they are getting their pension from as well….
Get me another single malt Jeeves…
- JustMe - Wednesday, Oct 12, 11 @ 12:09 pm:
Gotta love how Cross proposes to close this loophole. The current law says you can’t draw a city pension if you’re covered by a local union pension. I’m guessing that Naimoli’s union pension was “blessed” as not coming from a local, even though the local paid for it. Cross will make any union pension a disqualification, which would still allow someone to retire “from a $15,000-a-year city job that he hadn’t worked at in a quarter-century” and draw a 6-figure pension from the city.
Ubi est meum?
- PublicServant - Wednesday, Oct 12, 11 @ 12:10 pm:
These pension double-dipping union leaders, and the suburban superintendents that have been receiving enormous end-of-career salary boosts from their school boards at the expense of the pension, and the pension’s reputation have hurt public employees more than Bill Brady ever could, and they should be denied their unreasonable pensions and prosecuted, if possible.
OK, maybe Bill Brady would have been worse for public employees and the state for that matter, but I hope the Cross bill focusing on these abuses passes.
And thanks, Wordslinger, for stating the difference between those who abuse the pensions and those who have earned them.
- D.P. Gumby - Wednesday, Oct 12, 11 @ 12:13 pm:
It’s interesting that this appalling behavior is considered so outrageous, but the fact that the gap between workers and CEO’s was ~25% in 1965 is now ~185%. So these union pension guys are real slackers by comparison.
- Bill Baar - Wednesday, Oct 12, 11 @ 12:18 pm:
Illinoisians really need a story on the story as some of this has been going on for years, was known to some, and all of a suddent now, becomes news.
- Cook County Commoner - Wednesday, Oct 12, 11 @ 12:20 pm:
The feds are presently trying to stop the investment banks from trading on their own funds because it can create a conflict of interest with bank clients. Wasn’t it Goldman Sachs that got caught taking the opposite position in investments it recommended to its clients? But politicians are entitled to accept campaign contributions from organizations seeking the taxpayors’ dollars or favorable legislation such as gov employee unions, lawyers, insurance companies, road builders, TIF seekers, etc. Apparently no conflict of interest there because it’s “freedom of speech.” Well, the corrosive effect of money in politics is only now starting to smack everyone in the face. It was relatively inconsequential as the US lavished in its post-WWII prosperity, but those days are over. Now the bill is coming due. And there’s no white knight out there to protect everyday taxpayers from what is coming.
- JP - Wednesday, Oct 12, 11 @ 12:22 pm:
Would it be possible to oppose both extremes…that is, corporate pay which doesn’t match value to the shareholders, and Government/Union pay, which doesn’t match value to the taxpayers?
Or would that violate one of the rules that blogs must constantly be filled with partisan sniping.
JBP
- Rich Miller - Wednesday, Oct 12, 11 @ 12:26 pm:
===It’s interesting that this appalling behavior is considered so outrageous, but the fact that the gap between workers and CEO’s was ~25% in 1965 is now ~185%.===
The difference is we know CEOs aren’t necessarily looking out for their workers’ best interests. That’s supposed to be a union leader’s job.
- Anonymous - Wednesday, Oct 12, 11 @ 12:36 pm:
Is there any cost to taxpayers?
It appears the answer is NO - those in questions paid both the employee and employer contribution.
If that is so, this looks bad, but doesn’t actually hurt anyone.
And if that if so, the Trib and WGN are extremely irresponsible for not making clear such a basic point. Allow me to think they fudged it because it would undercut the sexiness of the story they’re trying to flog - which Rich rightly pointed out was mostly published years ago by the Sun-Times.
- wordslinger - Wednesday, Oct 12, 11 @ 12:38 pm:
–Is there any cost to taxpayers?
It appears the answer is NO - those in questions paid both the employee and employer contribution.–
Are you kidding? At those figures, they’ll burn through their contributions in a New York minute.
- Anonymous - Wednesday, Oct 12, 11 @ 12:42 pm:
Yes there is a cost to taxpayers because the amounts contributed over time will never begin to be enough to cover this large increase.
- dupage dan - Wednesday, Oct 12, 11 @ 12:44 pm:
If the the taxpayers haven’t had to pony up and the rank and file don’t care, why should we?
- Anonymous - Wednesday, Oct 12, 11 @ 12:51 pm:
And the third Anonymous said “maybe”. lol
- ZC - Wednesday, Oct 12, 11 @ 1:08 pm:
You can still stand up for ordinary Illinois pensioneers and recognize, however, that this rigid constitutional provision in IL makes it very, very hard to distribute justice and address the corruption at one edge of the pool.
I hope they go after these guys legally. But as long as it’s written into the IL Constitution, “If you can finagle your way to a mega-bucks payout, it’s yours, in perpetuity,” it’s going to be a magnet for these guys to keep trying.
I support pensions, especially since the corporate CEOs seem to be making them the way of the Dodo in the private sector (while larding up their own megamillion retirement packages). But this constitutional provision in Illinois is a separate animal.
- JP - Wednesday, Oct 12, 11 @ 1:15 pm:
ZC,
So if I have that right, you support ripping off the taxpayers, because Corporate CEO’s rip off the shareholders?
Any wonder how we get in such a financial mess in this country.
jbp
- Demoralized - Wednesday, Oct 12, 11 @ 1:26 pm:
I agree that something has to be done about the pension abuses. But, the Constitutional provision protecting pensions is there to prevent the very thing that is happening now - that is attempts to pull the rug out from under people mid-career. You cannot have a workforce with pensions that are subject to the whims of politics and the outrage of the day.
- railrat - Wednesday, Oct 12, 11 @ 2:16 pm:
yes its beyond outrageous!! and I just KNOW Cross will return all the campaign contributions he has accepted from these labor unions during this dasturdly pension scam !!! LOL the sad thing is a the members the rank and file working stiff, will be get caught up in the bad public peception that these “leaders” have created.
- jacketpotato - Wednesday, Oct 12, 11 @ 2:20 pm:
My other point is not only compensation packages for the bosses, it’s the fact that they destroy a company, ruin shareholders and then get handed a $32 million parachute to go away.
Constitutionally not obligated to pay their compensation. In reality we already did when we bailed them out. Many of the bosses that took TARP money still have their jobs and were paid.
I’m getting further and further from the reservation with this, but as long as I’m in the drum circle, I’d also add the fact that very few CEOs are /will ever going to go to jail for ruining the economy.
- ZC - Wednesday, Oct 12, 11 @ 4:23 pm:
Pensions in general are not a rip-off of the taxpayers. I’m proud to pay taxes to help support the retiremeent of public service officials who spent their best years looking after juveniles, walking streets, cleaning the garbage, educating kids, etc.
I support government pensions and it’s not a rip off of the taxpayers in the slightest. But a lot of states out there don’t have an absolute constitutional mandate out there, saying there can -never- be a reduction in pensions. And they still, in fact, do have pensions in those states. Is what I’m saying.
- JP - Wednesday, Oct 12, 11 @ 4:29 pm:
If what Rich describes above is not a rip-off, then there is no such thing as a rip-off.
The pension system is routinely gamed in Illinois to avoid doing the work you describe so that people who are perfectly capable of “best years looking after juveniles, walking streets, cleaning the garbage, educating kids, etc” are taking early retirement to avoid doing productive labor, or double dip by coming back as a contractor doing the same job they had before.
JBP
- east central - Wednesday, Oct 12, 11 @ 7:39 pm:
If the concern is about large pensions and/or end-of-career spiking, why not pass a law to make the full actuarial cost of these the responsibility of the employing organization? If a school district, agency or university believes it must pay a salary more than the Social Security basis maximum with indexing (currently $107K), then make the employing unit responsible for the full pension cost of anything above the SS max; the unit would pay the actuarial cost up-front for what the pension system, and ultimately taxpayers, must now bear for pensions based on amounts above $107K. In addition, any year-to-year increase above CPI+1.5% (1.5% to allow for step increases) could also be assessed to the employing unit. This would prevent school districts, etc., from giving large long-term benefits to some employees at the expense of the State pension systems. The employing district, unit of government or university would then bear the financial responsibility for what many term pension abuses. And as far as I can tell, it would be full constitutional.