Aldermen have been eligible for pension benefits since at least the 1960s. But before 1991, the pensions were modest, and few aldermen bothered to participate in the fund.
The subcommittee was supposed to report back to the full City Council within 45 days, which would have made the details public. But council records show that never happened. Instead, the pension deal was hashed out behind closed doors by trustees from the municipal pension fund and the Daley administration, records show.
In a letter to members, the municipal pension fund's executive director at the time described the legislative package that would be introduced in Springfield and said it "was developed during negotiations between the fund … and representatives of Mayor Daley's administration."
When the bill's main sponsor, Sen. Emil Jones, presented the final draft of the legislation to the state Senate, he assured his colleagues of Daley's approval. "It is provisions that mostly deal with the city of Chicago," he said. "And many other small benefits that have been agreed to by the administration, as well as — as the various systems. Also, it adds in there — the Chicago aldermen."
Then-state Sen. Roger Keats was the only legislator to question why aldermanic pension sweeteners were added. "The discussions were nonexistent," Keats said of pension bills in that era.
The bill passed both chambers of the Legislature on the last day of the session and was signed into law on former Gov. Jim Thompson's last day in office.
Pension fund records show two officials were handling pension matters for Daley at the time: Edward Bedore, a longtime confidant who was then budget director, and Walter Knorr, Daley's appointee on the municipal pension fund board. Neither returned phone calls seeking comment.
Through a spokeswoman, Daley declined to be interviewed.
$91,000 a year
The Tribune and WGN-TV examined more than 4,000 pages of pension documents relating to aldermen. But a few pages from the file of former Ald. Allen, 38th, are enough to reveal just how lucrative the City Council's retirement package can be.
Allen's family is connected by marriage to the Cullerton family, which has been a force in city politics since the Great Chicago Fire. Allen's brother-in-law, Timothy Cullerton, is the ward's current alderman. Daley appointed Allen as aldermen in 1993 to complete the term of Thomas Cullerton, Timothy's father, who died while in office.
Allen was able to retire on 80 percent of his $110,000 salary even though he served only 17 years on the council, fewer than the 20 needed to receive the maximum benefit. That's because the law allows aldermen to easily upgrade past service at a low cost compared with the benefits they stand to receive.
Just before retiring in 2010, Allen paid $21,000 to buy 51/2 years of pension credits for the time he spent as an aide to Cullerton. And because he didn't join the aldermanic plan until 1997, Allen paid an additional $24,000 to upgrade his prior years of service to the plan. That $45,000 in new contributions more than doubled his base pension from $41,000 to $88,000, records show.
Now he receives about $91,000 a year. In just seven more years, his city pension will be larger than his aldermanic salary.
Allen's contributions, those made on his behalf by taxpayers, and the assumed investment returns are expected to cover just a quarter of the $4.2 million he stands to receive if he lives to be 88. The other $3 million will have to be picked up by taxpayers as well as current and future city workers.
Allen notes that he has spent his entire professional life as a public servant, although he did work at a private law firm while on the City Council. "I don't pretend to be an actuary," he said. "I don't even know how it works. All I know is I got up every day and went to work and did the best I could. Whatever flows from that, I have no control over."
When he left the City Council and started drawing a city pension at age 58, Allen didn't really retire. His city pension comes on top of his $178,000 salary as a judge.
Appointed by the Illinois Supreme Court to fill a vacancy on the Cook County Circuit Court, Allen will be eligible for a second public pension from the Judges' Retirement System of Illinois when he retires from that job.
The judges' plan has a reciprocal policy that will allow Allen to transfer eight years of credit he earned as a county public defender back in the 1970s and '80s. If he does that and puts in 12 years on the bench, he will land a pension that's 85 percent of his judicial salary.
Asked if he thought Daley had manipulated the pension system to win the support of the City Council, Allen said he couldn't say.
"I don't really know what motivated anyone to add or subtract from pension laws in Springfield," he said. "I never liked Springfield. When I went there, I didn't like it."
WGN-TV producer Marsha Bartel, WGN-TV reporter Mark Suppelsa and Tribune database editor Alex Richards contributed.
Coming next: Deconstructing Richard Daley's big pension