Employees of the Windy City face the same circumstances as their counterparts who work for the government of their state: a pension system with huge funding liabilities. Chicago is third among U.S. cities in population, but it may be first in pension fund shortfall.
Two of Chicago’s pension funds are deeply in the red. By the end of 2014, the funding shortfall for the plan for municipal workers was $8.4 billion; that for the plan for laborers was $1 billion, Reuters reported.
Chicago contributed $476 million to its pension fund in 2014. Nearly half a billion dollars sounds like a lot, until one learns that the city also paid $1.8 billion in pension benefits last year, according to Reuters. And the city is projected to start spending over $1 billion per year in pension payments, starting this year.
Moody’s has been sounding alarm bells since 2013, when it downgraded Chicago’s credit rating to Baa1, on the strength of this liability, says Pension Pulse. At the close of 2014, Moody’s said that the city has an adjusted net pension liability of $32 billion, which is eight times larger than Chicago’s entire operating revenue.
Two of Chicago’s pension funds are deeply in the red. By the end of 2014, the funding shortfall for the plan for municipal workers was $8.4 billion; that for the plan for laborers was $1 billion, Reuters reported.
Chicago contributed $476 million to its pension fund in 2014. Nearly half a billion dollars sounds like a lot, until one learns that the city also paid $1.8 billion in pension benefits last year, according to Reuters. And the city is projected to start spending over $1 billion per year in pension payments, starting this year.
Moody’s has been sounding alarm bells since 2013, when it downgraded Chicago’s credit rating to Baa1, on the strength of this liability, says Pension Pulse. At the close of 2014, Moody’s said that the city has an adjusted net pension liability of $32 billion, which is eight times larger than Chicago’s entire operating revenue.
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