CHICAGO, IL – Mayor Rahm Emanuel’s plan to raise employee contributions by 29 percent to save two city employee pension funds will cost workers $55 million by 2025 and reduce their benefits by 14 percent, an independent analysis has concluded.
The Anderson Economic Group conducted the study at its own expense to determine the true cost to taxpayers and retirees with no vested interest or pro-union bias. For a 67-year-old retiree with $36,000 in annual benefits from the Municipal Employees pension fund, the cost of the mayor’s cuts was pegged at $9,000 in 2024. That’s because a pension check that would increase by 34 percent without the reforms would rise by only 9 percent with the changes. Employees who are yet to retire would see an increase of 11 percent with the changes.
The Anderson Economic Group also calculated the cost to Chicago taxpayers that Emanuel hopes to offset with a $250 million property tax increase if Gov. Pat Quinn agrees to sign the pension-reform bill.
The city will be required to contribute $530 million by 2025. That’s 9 percent of overall city revenues and $450 million more than the city would otherwise be required to contribute without pension reform. But the cost of waiting even five more years to confront the city’s pension crisis was even worse. It was pegged at $310 million because of lost investment returns.