Next School Crisis for Chicago: Pension Fund Is Running Dry
Source: NY Times
By MARY WILLIAMS WALSH
One of the most vexing problems for Chicago and its teachers went virtually unmentioned during the strike: The pension fund is about to hit a wall.
The Chicago Teachers Pension Fund has about $10 billion in assets, but is paying out more than $1 billion in benefits a year much more than it has been taking in. That has forced it to sell investments, worth hundreds of millions of dollars a year, to pay retired teachers. Experts say the fund could collapse within a few years unless something is done.
Theres a huge crisis, said Laurence Msall, president of the Civic Federation, a nonpartisan research organization in Chicago that works on fiscal issues. The problem does not get easier by waiting. The problem gets bigger, and starts to become an insurmountable obstacle.
Teachers in Chicago, as in many cities, do not earn Social Security credit for their years in the classroom.
FULL story at link.
Read more: http://www.nytimes.com/2012/09/20/business/teachers-pension-a-big-issue-for-chicago.html?partner=EXCITE&ei=5043
Fabrizio Costantini for The New York Times
Claire J. Murray retired in 2002 with a pension of about $42,000 a year, based on 34 years as a teacher and middle-school counselor.
Travis_0004
(5,417 posts)Too many politicans underfund pensions, and kick the can down the road, which causes huge problems latter on. Private and public jobs should not be allowed to promise pensions unless they are funding them at that level. It would wreck havoc on budgets, but at least we are dealing with them now and not down the road.
antigop
(12,778 posts)Mary Williams Walsh (same author who wrote the article in the OP) wrote about this:
http://www.nytimes.com/2012/05/28/nyregion/fragile-calculus-in-plans-to-fix-pension-systems.html
While Americans are typically earning less than 1 percent interest on their savings accounts and watching their 401(k) balances yo-yo along with the stock market, most public pension funds are still betting they will earn annual returns of 7 to 8 percent over the long haul, a practice that Mayor Michael R. Bloomberg recently called indefensible.
Now public pension funds across the country are facing a painful reckoning. Their projections look increasingly out of touch in todays low-interest environment, and pressure is mounting to be more realistic. But lowering their investment assumptions, even slightly, means turning for more cash to local taxpayers who pay part of the cost of public pensions through property and other taxes.
no_hypocrisy
(46,086 posts)to balance her budget. None of it has been paid back into the fund and Christie now wants to write off the debt.
mopinko
(70,089 posts)the hell with that.
SheilaT
(23,156 posts)going on for decades. I recall reading as far back as the mid-70's that eventually there was going to be a huge crisis in public pensions. It's coming to pass.