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Chicago Area Pension Plans Another Day Older And Deeper In Debt

By Chuck Sudo in News on Jun 27, 2012 3:15PM

While Springfield drags its collective heels on pension reform a report released Monday by the Civic Federation (which we've included below) shows that the health of ten Chicago area public employee pension funds has gotten worse over a ten-year period.

What was a $4.6 billion problem ten years ago is now a $27.4 billion problem for public pension funds in the Chicago region,” said Civic Federation President Laurence Msall. “The need for reform will continue to escalate until Illinois and local lawmakers reach consensus on a plan that offers security to public employees and affordability to taxpayers.”

The study shows the insolvency of the pension plans is due in large part to declining employee contributions over that period and investment losses. From the report:

The average rate of return on pension plan assets for those funds with a January 1 to December 31 fiscal year was 13.7% in FY2010, down from 18.6% in FY2009. The average rate of return for funds using a July 1 to June 30 fiscal year was 12.7% in FY2010, up from -20.2% in FY2009. Investment income represented approximately 56% to 86% of total FY2010 income.


Between FY2001 and FY2010, the ratio of total active employees to beneficiaries for the ten funds combined has gradually dropped from 1.70 actives per beneficiary to 1.23, indicating that there are fewer active employees supporting more retirees. The Laborers’, MWRD, CTA, Park District and Forest Preserve Funds all had more beneficiaries than actives in FY2010.

The Illinois General Assembly's inability to reach a deal on pension reform only exacerbates the problem. Msall told the Tribune, "Inaction during the past 10 years means it's not just politically more difficult to fix this problem but also mathematically more difficult."

2012 6 27 Pension Report