WTTW News Explains: Why is Chicago’s Pension Debt So High? | Chicago …

You may have heard Chicago has a pension problem … to the tune of more than $35 billion of debt.

That’s money meant for city employees down the line, when they reach retirement.

The city’s pensions are underfunded, so the fear is that those retirement benefits won’t be there when workers retire.

Pensions affect nearly everyone — even if you’re not a public employee. Taxpayers have already been footing the bill to alleviate the pension debt.

See, cities are rated on their fiscal stability, and credit rating agencies frown on pension underfunding. If they cut the city’s rating, it becomes more difficult and expensive for Chicago to borrow money.

That extra cost either gets put on residents, often through higher taxes, or means less money for other city programs like schools, public safety or filling potholes.

How’d it get to this point? First, you need to know how pensions work.

They start out like most other retirement plans: A certain amount is taken out of a…