North Side Alderman: City Nears Pension 'Perfect Storm'

Carol Keating-Johnson is worried about retirement.

She and her husband both depend on city of Chicago pensions—he as a sanitation worker and she, as a Chicago Public Schools employee.

“We are worried he will not have a pension when he retires. Where are we going to live? We can’t afford to buy a home right now,” she said. “We’re concerned, are we going to be in poverty?”

The underfunding of city, county and state systems are amassing into a “perfect storm” of the pension crisis, Ward 47 Ald. Ameya Pawar said. He joined Rep. Ann Williams (D-11) and Cook County Commissioners Bridget Gainer and John Fritchey Thursday evening at a town hall forum focused on public employee pensions. Held at St. Benedict Prep High School in Northcenter, about 75 people showed, seeking answers.

State pensions are underfunded by $96 billion and county funding has been reduced by 30 percent in the last decade, officials said.

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The total shortfall in the city’s four pension funds is $26 billion, Pawar noted. They consist of those for firefighters, police, laborers and retirement board workers, as well as municipal employees.

The shortfalls reportedly stem from unfunded liabilities, a higher health care cost, lower investment returns and people living beyond their life expectancy. A significant portion of the city’s pension woes also come from a structural budget deficit, Pawar said. While the city has decreased its total employees, as well as privatized parking meter and recycling programs, to reduce the debt, fewer people are working.

“When you have less people paying into a pension system and more drawing out, that’s a problem,” Pawar said. “I think if the conversation continues to be greedy public servants versus people busting pensions, I think you’re never going to have a reasonable conversation.”

Difficult decisions need to be made before a 2015 deadline. Per state law, pensions must be funded to their actual payments in that year. The difference could mean a 50 percent increase in property taxes, Pawar said.

One solution may include a combination of boosting revenue, cutting benefits and increasing employee contributions and retirement age, Gainer said.

Without a solution though, Gainer said that by 2038, the pension fund would be wiped out entirely.

Notions like that are precisely what drew North Side residents like Keating-Johnson to Thursday's town hall. She also wanted her husband to better understand the pension problem, she said.

“I feel more informed about what the problem is, but I didn’t see many solutions,” she said.

As for now, the couple is looking into alternative, less ambiguous retirement plans, such as 401Ks.