By Martin Armstrong 6/24/17
Chicago’s police pension fund won’t have enough money to pay benefits to retirees in 2021, according to a projection by Local Government Information Services (LGIS). At the end of 2020, LGIS estimates that the Policemen’s Annuity and Benefit Fund of Chicago will have less than $150 million in assets to pay $928 million promised to 14,133 retirees the following year.
This is the fate of state and local pension funds. There is a storm gathering on the horizon and of course these state and local governments will be raising taxes to try to stay afloat. The system is collapsing and it is totally unsustainable. This is the very same crisis that destroyed the Roman Empire.
Government employee pension plans are coming home to roost. These defined benefit plans can be terminated and balances transferred to defined contribution plans like 401k plans.
The funds that would have gone to pensions could fund an age-weighted plan, where older police officers get a larger contribution. These accounts would be owned by each individual participant and vesting should be 100% in 5 years.
Government retirement benefits need to be reformed to require them to work in come capacity until age 66, not vested after 30 years of service. Defined benefit plans are unsustainable, but defined contribution plans are sustainable.
Norb Leahy, Dunwoody GA Tea Party Leader