The State of Illinois has the most underfunded public pension plans in the nation, with a funding gap that is now approaching $50 billion. The low balances in the state's pension accounts have been made worse by the stock market crash, which has also hit Chicago's and Cook County's employee pension plans.
Here's a look at the dire situation for the retirement plans of state workers ranging from police to judges to university professors to members of the Illinois General Assembly. All are counting on generous state pensions, but may soon wake up to a brutal reality.
A financial war is brewing -- and it's likely to pit these public employees against Illinois taxpayers who are responsible for paying those generous pension promises. There simply isn't enough money in all these retirement plans (see box) to send out the promised checks. If you think Bernie Madoff had a Ponzi scheme going, wait until the wave of boomer retirement hits the reality of pension underfunding.
The state pension plans have been underfunded for a long time. But the problem is going critical because of the stock market crash. Unless you're willing to bet on a major bull market appearing in the next few years, there are only three solutions: raise taxes, increase employee contributions, or cut pension benefits.
And yet a con-con would threaten these pensions.
Via Instapundit!
It would be useful to see a Sun-Times chart depicting pension underfunding in 2009 dollars during the past 20 years.
ReplyDeleteIt would be tempting to blame Blagojevich.
But the underfunding pension game has gone one for a number of years in Illinois.