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CINCINNATI, OH (FOX19) -
pension deficit is massive - $860 million with no clear-cut funding
solution in sight.
The Queen City is hardly alone in its current debt crisis.
According to a Pew Center Study, 61 municipalities including Los Angeles,
Chicago and Detroit, the largest American city ever to file bankruptcy, face
pension shortfalls totaling $3 trillion.
While Cincinnati City Council continues to wrangle over the city's pension liabilities, Utah Senator Orin
Hatch is pushing legislation that would offer Cincinnati and other
municipalities the option of privatizing pension funds through life insurance
companies like Prudential, Aetna, and Met Life.
the Safe Retirement Act, insurance companies would compete for the right to
take over public pension plans, which would then be converted into fixed-income
annuity contracts payable based on years of employment. Forty-year workers
would receive payouts from retirement until death.
The contracts would be portable,
meaning if a worker changes jobs, the annuity goes with them. The insurance
companies would invest employer-paid premiums, provide the payouts and assume
all the risks.
Hatch faces an uphill fight, not only from a Congress facing a budget battle
that could lead to a government shutdown this fall, but potentially from
municipalities like Cincinnati which have historically diverted money away from
pensions as a means of funding other programs.
Meanwhile, New York City mayoral candidate John Liu, who ran one of the largest
municipal pension funds in the country, says Hatch's bill is built on "false
assumptions," and that insurance companies answer to shareholders and not
City leaders fought and won the right to lease Cincinnati's parking
system to ease their debt burden, who's to say what they might privatize next?