The Municipal Employees' Annuity and Benefit Fund of Chicago will run out of money by the year 2024, according to a model developed by actuary Mary Pat Campbell.
Campbell said she created the model to give people an idea of how serious the pension problem is in urban Illinois, particularly Chicago, and to prompt them into taking it seriously.
Using data from Truth in Accounting, Pension Tsunami, Wirepoints, and the conservative blog The Other McCain, Campbell based her cash flow model on the last 10 years of government contributions.
What she found was that growth rate over that time has been approximately 4 percent, but contributions have not been enough to maintain the fund past 2024.
“I don’t think they have ever made a full contribution in the history of the fund, and that of course wears on a fund after a while," Campbell told the Chicago City Wire. “The plans I have seen absolutely come nowhere close to filling this hole."
Campbell said government contributions to the fund will probably not increase enough to keep it afloat.
“If you can’t cover the contributions now, you are definitely not going to be able to cover the benefit load, is the problem," she said.
She pointed out in her model that even if the government contributions were to increase 10 percent every year -- a cumulative increase of 160 percent -- and the growth rate stayed at 4 percent and the annual returns remained at 7 percent, it would still not make it past 2030.
“I just want people to see the exercise of what it would require to be able to sustain the benefit payments," Campbell said.
Campbell said that while she has discovered other pension plans with problems, Chicago's is the worst.