Chicago may not survive

Illinois Policy: Chicago’s four city-run pension funds experienced a bad year of investment returns in 2015 – highlighting once again why it’s important for Illinois to end politician-run pensions. According to the Chicago Sun-Times,

Moody’s Investors Service has said the four funds’ investment returns “ranged from -1.5 percent to +1.8 percent.” Moody’s noted that’s “far below assumed returns of 7.5 to 8 percent” that the funds need to achieve. Pension investments are part of the same markets as private-sector 401(k) investments, and are subject to the same ups and downs everyone experiences with the markets. 

But because investment returns are key for funding pensions – and because these funds have so many participants – weak returns are an even bigger problem, and lead to increased funding deficits. This increases the cost to taxpayers because the government has to make up for the shortfall by paying more to the pension fund.

More bad news.  Another downgrade from Moody's I hear, and BlackRock is pushing for a lending strike.