Moody’s: Chicago Can Expect Pension Payments To Swell For Years Even As City Ups Contributions

chicago

Pension360 has closely covered Chicago’s ballooning pension payments; 2015 is the first year the city will begin making much bigger contributions than in years past.

But even as Chicago doubles its payments between 2014 and 2015, the city can expect pension contributions to continue swelling, according to a new report from Moody’s.

The city paid $476 million into its pension systems in 2014, but that total will more than triple over the next ten years, according to the report.

From the Chicago Tribune:

Chicago’s pension payments not only will grow by 135 percent to $1.1 billion next year, but also will continue swelling at a significant pace until 2026, when they will reach $1.9 billion — or four times what the city is paying into those funds this year, according to the report by Moody’s Investors Service.

Though the city will put more money into its retirement systems, the total pension debt, now estimated at about $20 billion, will continue to grow until 2027, when the city would finally begin to whittle away at that liability, the report states. But the payments still would continue to increase by up to 3 percent a year until 90 percent of the debt is covered, the report adds.

The police and fire pension funds, which account for most of the payment increases, are not expected to reach 90 percent funding until 2040. That’s the schedule set under a state law that also requires that the city pay $550 million more into those two funds next year.

Moody’s didn’t downgrade the city’s debt rating or make any recommendations; the purpose of the report was simply to highlight Chicago’s financial outlook in the midst of rising pension costs.

Photo by bitsorf via Flickr CC License

Share This Post

Recent Articles

Leave a Reply

Privacy Policy | © 2017 Pension360 and © 2014 Policy Data Institute | Site Admin · Entries RSS ·