PUBLIC PENSION WAR :: CHICAGO SUN-TIMES :: Personal Finance: "While current retirees receive the promised benefits, what happens to future pension payments if the various fund investments cannot provide the benefits promised by law?
The answer may lie in the court system. James Spiotto, an attorney with Chapman and Cutler in Chicago, helped rewrite the Chapter 9 bankruptcy laws in the 1980s. Rarely discussed, Chapter 9 provides for municipalities to go through a bankruptcy reorganization. It has only been used 564 times since enacted in 1937.
Spiotto explains that a city seeking this type of bankruptcy protection could renegotiate all of its contracts, including pension promises. That sets current workers, who want to make sure the money already in the pension plan is equitably distributed, against retirees and those nearing retirement.
Public pensions are a national crisis."
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As a fellow who has been paying into one of these public pension funds (state, not city) while the state government blithely declines to make its contributions, I do not look kindly on the notion that some bankruptcy judge will allow them to get away with it.
But note that the premise of this whole scenario is that the City of Chicago, or maybe the State of Illinois, could go bankrupt. Until recently, nobody even used the words "government" and "bankrupt" in the same conversation, let alone the same sentence.
And you think the nation's HOAs and condos are going to thrive and survive while the cities that surround them go bankrupt? Don't bank(rupt) on it.
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