The history of the Policemen's Annuity and Benefit Fund of Chicago began on April 29, 1887, when the Illinois General Assembly authorized the creation of the Fund, for "Cities, Towns, and Villages having a population of 50,000 or more."

     • Two percentum of all moneys received from licenses for the keeping of saloons or dram
        shops.
     • Three-fourths of all moneys received from licenses upon dogs.
     • All moneys received from:
        - Fines imposed upon members of the police force for violations of department
          regulations.
        - Proceeds of the sale of unclaimed stolen property.
        - Fees and fines for carrying concealed weapons.
        - Rewards given or paid to members of the police force, except such as shall be excepted
          by the Chief of Police.
     • One-fourth of all moneys received for licenses for pawn brokers and second-hand dealers.
     • One-half of all costs collected in money for violations of City Ordinances.
     • One percentum per month to be deducted from the salary of each member of the police
        force. Provided: That no such member be compelled to pay in excess of two dollars a
        month.

The legislature provided that board of Pension Commissioners would be comprised of
      The President of the Board of Trustees of the City, Village, or Town,
      The Comptroller,
      The City Clerk,
      The City Treasurer,
      The Chief Officer of the Police Department and
      The City Attorney.

It was directed that pension would be awarded to persons who shall have 20 years of service and who were at least 50 years of age, and who had retired from active service.
Such pensions were to be one-half of salary paid for the 19th year of service.

Widows of policemen who died in the line of duty received pension of one-half the policeman's salary.
Widows of policemen who died a natural death after 10 years of service were awarded whatever the Board "deemed proper;" but in no event in excess of one-half salary.

The salary levels of policemen of that era are not available. It is recorded, however, that the first paid employee of the Pension Board was a clerk whose salary was $100.00 a year, payable quarterly.

At its first meeting on July 26, 1887, the Board elected A.H. Burley President and D.W. Nickerson Secretary.

At its meeting of July 10, 1888, Mr. Nickerson in his first annual report to the Trustees showed total receipts for the year to be $30,253.18 and expenditures to be $21,388.77. This left a balance of $8,864.41.

At its meeting of January 9, 1900, the clerk reported receipts of $306,206.12; expenditures of $199,988.02, and a balance of $106,218.10 for the year ending December 31, 1899. During this year, a common pension granted to patrolmen who qualified for one-half pay was $41.66 per month.

Over the years, the laws governing the Pension Fund were changed many times. Then in 1921, a law was passed which re-codified and restructured the entire pension system. Under this law, which became effective on January 1, 1922, the Police Pension system of Chicago was put on an actuarial reserve basis. This change was a radical one which required much larger contributions of money from both policemen and taxpayers.

The theory of this law is that police officers shall receive such annuities as the accumulations to their credit for annuity purposes at date of retirement will purchase as of their attained ages; likewise that the widows of policemen shall receive such annuities as the accumulations of policemen for widow's annuities at the time of death, will provide.

This theory was applied in the main to "future entrants;' i.e., police officers who entered service after January 1, 1922. "Present employee;' i.e., persons who entered service prior to January 1,1922, were not funded in this fashion but did receive similar benefits.

At December 31, 1921, the beginning of the modern era, the number of persons men, women, and children - on the pension roll was 1,980, and the total amount of their benefits was $113,903.88.

From the time of the restructuring of the Fund in 1922, the Fund grew steadily. In the early days, investments were limited to obligation of the United States Government and Illinois municipals (tax exempt). In 1961, the Illinois General Assembly passed into law an amendment permitting the Police Pension Board to place 20% of the assets in corporate bonds. In 1963, this restriction was increased to 33%, and later the restriction was removed altogether. During the 1960s the Fund added greatly to its holdings of Corporate Bonds and Public Utilities Bonds which carried substantially higher rates of return than tax exempt bonds or Treasury instruments.

During this time, retiring policemen did not enjoy the fullness of the pension formula until reaching age 57 with at least 20 years service. Upon fulfilling these two requirements, a policeman could obtain an annuity equal to 2 % for each year of service of average salary base up to a maximum of 75%. During the 1970s and 1980s these requirements were reduced to 53 years of age and 23 years of service; then to 52 and 22, 51 and 21, and finally 50 and 20.

In 1972 the General Assembly passed into law an amendment permitting the Fund to place 10% of the assets in common stock. This restriction was raised to 40% in 1983.

In 1983, the Trustees of the Retirement Board embarked on a far-reaching program to completely revise the investment process. Until that year, the Board had one investment advisor, a company which had only limited investment authority until late in its relationship with the Retirement Board.

Early in that year the Board decided to go to a multiple manager set, and for that purpose they interviewed and selected Ennis Knupp & Gold to be their financial consultant and to supervise and conduct the money manager search.

The Board heard many presentations from money manager candidates throughout the
year, and in the end hired eight which were judged to be superior performers and to have the right mix of styles for the Fund.

The Pension Fund now employs 18 investment managers in all sectors of the financial markets. These include equity managers, fixed income managers, index managers for both equity and fixed income, venture capital managers and Real Estate managers. The portfolio has been restructed in such fashions that the risk characteristics are low while the relative rate of return potential is high. The Trustees are confident the Fund will do well in all kinds of financial weather.