Pension Problems

This has popped up in a few comments sections, so we did a little searching and came up with this article from Crain's Chicago Business:

• The Daley administration is sounding an unusual public alarm about the declining finances of the city's massive employee pension plans.

  In a high-profile speech and subsequent interview that were far stronger than any earlier remarks by city officials, Chief Financial Officer Dana Levenson laid out stark new numbers and projected that pension systems covering police, firefighters, office workers and others will have to begin liquidating assets within a decade and may even face insolvency as soon as 2028 unless something changes.

  "We need collective recognition by all the stakeholders . . . that this situation, without doubt, is a problem," Mr. Levenson told an audience at the City Club of Chicago last week. One example he offered: The $3.9-billion police fund needs to make an 11% return on its investments to break even, but last year netted just 7.3%.

Things that make you go "Hmmm." As we understand State Law (currently written), the City is obligated to pay pensions, which means that they will eventually have to raise taxes to cover any shortfalls. But could this be the beginning of the end of pension plans for public employees? Might we all be moving to private IRA's or similar plans? What effect is this going to have on young guys and gals who can't afford homes in the nicer parts of town AND now might have to fund their own retirements? Numerous questions spring to mind - and the answers aren't as numerous.