Chicago Municipal Employees' Annuity & Benefit Fund is projected to be 90% funded by 2057 under an agreement announced Wednesday between city officials and unions representing pension fund participants.
A news release from Mayor Rahm Emanuel's office praises an agreement in principle, pending City Council approval, between the mayor's office and unions to put the $4.6 billion pension fund “on a path to solvency.” As of Dec. 31, according to its annual report, the pension fund had $18.6 billion in liabilities, for a funding ratio of 24.7%.
The agreement increases the payroll contribution for new employees hired on or after Jan. 1, 2017, to 11.5% from 8.5%, and also reduces their age of eligibility for full benefits to 65 from 67. The agreement also provides for employees hired on or after Jan. 1, 2011, to have the option of increasing their payroll contributions to 11.5% from 8.5% in return for their retirement age being reduced to 65 from 67.
Beginning in 2017, the agreement also calls for the creation of a tax on water-sewer usage that will be assessed on Chicago businesses' and residents' unified utility bill, the revenue from which will be used to make all future contributions to the pension fund. The agreement also calls for the city to begin making contributions on an actuarial basis by 2022. The schedule, the news release says, will bring MEABF up to a 90% funding ratio by 2057.
The agreement echoes one made in May to bring the $1.35 billion Chicago Laborers' Annuity & Benefit Fund to a 90% funding ratio by 2057.
Officials in Mr. Emanuel's office, and Jim Mohler, MEABF executive director, could not be immediately reached to provide further information.