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The city of Chicago’s pension funds only generated $90 million in investment income but paid retirees $999 million in 2015, according to Chicago City Wire.
Chicago is just one of several cities or states facing a crisis in which pension funds are not generating enough money to cover obligations to retired employees.
An analysis by Chicago City Wire of the six pension funds provides a frightening picture of the city’s economy. None of the funds generate enough money to cover retirement obligations to employees.
“All six operate as government-sanctioned Ponzi schemes, paying retirees with contributions made into the fund by active city employees, as well as taxpayers contributing on those employees’ behalf,” Chicago City Wire reported.
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A Ponzi or pyramid scheme is a con game in which a fraudster uses money from new victims to pay previous suckers.
But it’s not just Chicago. According to Market Watch:
- The Michigan Public School Employees retirement pension fund is $26.7 billion underfunded.
- The South Carolina government employee pension fund is $24.1 billion underfunded.
- The Social Security trust fund is on pace to run out of money by 2034.
- The United Mine Workers of America pension fund is $6 billion underfunded.
Jeff Reeves of Market Watch wrote that “America is rapidly approaching a point of no return” in underfunded pensions.
“Say what you will about the solvency of Social Security, and the imperative of acting on admittedly imperfect calculations that still give us a good 15 to 20 years until the trust runs dry,” he wrote. “But the millions of Americans relying on underfunded pension plans have an urgent need for reform in 2017. And if they don’t get it, it could have serious effects on the American economy for decades.”
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