Many Cook County Pension Funds Have More Retirees Collecting Than Workers Paying in, Pappas Says
About one-fourth of governments with pension funds across Cook County have more retirees collecting from the funds than workers paying into them, Cook County Treasurer Maria Pappas said today.
Cook County’s major taxing districts annually report their key financial data to the Treasurer’s Office under the county’s Debt Disclosure Ordinance, authored by Pappas.
The Treasurer said the DDO figures show that 130 of the 549 taxing districts report more retirees collect pensions than active workers contribute to the funds – presumably for a future in which they begin collecting their own pensions.
“More retirees collecting than workers contributing presents a funding challenge to local governments struggling to keep pension funds solvent,” Pappas said.
In remarks prepared for an address to the City Club of Chicago, Pappas noted that pension funds have three major sources of funding: Payments from the government which employs the workers, payroll deductions from the workers, and interest money from investments.
Pappas said early retirement programs and cutbacks have reduced the number of workers contributing to pension funds, while failure by some governments to contribute fully and sagging interest returns on investments have added to bad financial consequences on the funds.
“When one of these financial sources diminishes, the other two struggle to provide the money the fund needs to send pension checks to retirees,” Pappas said. “When retirees outnumber workers, a fund may have to tap its investment money to write checks, further reducing its resources.
“Therefore, governments must keep an eye on this imbalance and act to provide sufficient financial resources to their pension funds,” Pappas said.
Watch Treasurer Pappas address the City Club of Chicago here.