Unfunded Chicago Pensions Total $42,000 per Household

by Amanda Griffin-Johnson Like many state governments, city and county governments across the country are facing huge unfunded pension liabilities. Recently, researchers from the University of Rochester and Northwestern University found that the average unfunded municipal pension liability per household is about $15,000. Unfortunately, Chicago has the highest per household unfunded pension liability of the 50 cities...

by Amanda Griffin-Johnson

Like many state governments, city and county governments across the country are facing huge unfunded pension liabilities. Recently, researchers from the University of Rochester and Northwestern University found that the average unfunded municipal pension liability per household is about $15,000. Unfortunately, Chicago has the highest per household unfunded pension liability of the 50 cities and counties studied at nearly $42,000 per household. As Forbes reports:

Chicago tops the list, with an unfunded pension liability of $44.9 billion or about $42,000 per household, followed by New York City at $122 billion or $39,000 per household and San Francisco at $35,000 per household. Measured another way, Philadelphia is in the worst shape, with only five years of assets to pay benefits at current rates, after which — barring an unprecedented explosion in stock-market returns — it will be forced to raise taxes to cover promises made to its retired employees. After that, assuming city tax revenues have grown 3% a year in the interim, Philadelphia would have to spend 19% of total tax revenue just to pay its retired workers. Boston, Chicago, Cincinnati, Jacksonville and St. Paul all are projected to run out of retirement assets by 2020 unless they increase contributions to their pension plans.

That’s a bigger problem for cities than for states or, say, the federal government, Rauh said.

“If people start seeing increased taxes to pay for pensions, without seeing increased services or actually reduced services, they’re going to leave,” he said.

You can read the full Forbes article here.