Lawmakers move to close pension loophole

September 22, 2011 2:46:30 PM PDT
Former Chicago Federation of Labor president Dennis Gannon is enjoying a pension windfall of $158,000 a year due to a legal loophole. Now, Illinois lawmakers are trying to change the law so it doesn't happen again.

Before he reached the high heights of labor in Chicago, Dennis Gannon worked for the Chicago Department of Streets and Sanitation as a hoisting engineer foreman. He resigned in 1993, but was re-hired the following year -- just for one day -- and then he took a leave of absence to return to his union job.

When he retired in 2004 at age 50, Gannon started collecting his city pension of $158,000 a year, which was based not on his modest city paycheck, but on his salary as a union leader. He wasn't just any union leader, but the president of the Chicago Federation of Labor; he was the face of labor in Chicago.

The Chicago Tribune reports that Gannon's already received about a $1 million from the taxpayer-supported city pension fund.

"At a time when the city is asking the city workers to do more, we've already endured furlough, it's a real punch in the stomach," Civic Federation president Laurence Msall said.

Gannon is currently employed by Grosvenor Capital Management, which does some work with public pensions. Gannon released a written statement saying he is "extremely proud" of his service to the city and organized labor, and that he "...always followed pension laws."

In 1991, a pension act by state legislators allowed for the inflated pensions that Gannon and nearly two dozen other union leaders currently claim by basing those pensions on union salaries. That financial burden now falls on taxpayers. "Those kind of things definitely need to stop," Ald. Walter Burnett, 27th Ward, said.

"Given the opportunity, we have to address pension reform," Chicago Mayor Rahm Emanuel said.

Mayor Emanuel did not talk specifics of reform, but Illinois House Republican Leader Tom Cross said he is going to introduce legislation that would eliminate what many see as nothing more than a sweetheart manipulation. Cross' proposal would allow city workers to receive higher salaries as union officials, but their pensions would be based on their city paychecks - not their union salaries.

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