A look at the pension situation in a few major U.S. cities with the worst-funded retirement systems, according to Morningstar:
CHICAGO: Mayor Rahm Emanuel has pitched a plan to cut the city’s nearly $20 billion pension shortfall in half by reducing benefits and hiking property taxes. But the proposal has drawn fierce resistance from labor unions, taxpayer groups and even the fellow Democrats Emanuel needs to approve it. With just 35 percent of the money needed to fulfill its promises to retirees, Chicago’s pensions are the worst-funded of any big U.S. city.
PHILADELPHIA: The city’s unfunded pension liability was $5.3 billion as of July. Some officials want to use proceeds from a local sales tax increase to help shore up the system, which is currently funded at 47.4 percent. However, the proposal is stalled by opponents who want the money primarily directed toward the troubled school system.
JACKSONVILLE: Jacksonville, Fla., owes approximately $1.65 billion to its police and fire pension fund, which had liabilities of $2.88 billion as of September, according to The Florida Times-Union. To address that shortfall, a pension-reform task force has suggested that the city raise the local sales tax from 7 percent to 7.5 percent and increase the city’s property tax by 10 percent. In turn, the city would pay $200 million per year into the pension fund instead of the required $153 million to pay down its debt in 13 years.
NEW YORK: Within weeks of taking office in January, New York City Comptroller Scott Stringer outlined an ethics plan to curb pay-to-play abuses in the system. Other changes mean new workers will be required to contribute a larger amount toward their pensions. Many workers will also no longer be able to count overtime hours to pad their pension totals.