"This acquisition is in keeping with our long-term strategy to remain the leading independent wealth management firm that can provide expanding benefits to clients and serve their wealth management needs for generations," said Rob Francais, CEO of Aspiriant.
Philadelphia, Chicago and Boston Are Study's Worst-Off Pensions
(Bloomberg News) Philadelphia will run out of money by 2015 to pay pension obligations with existing assets, and Chicago and Boston by 2019, a study by economists at Northwestern University and the University of Rochester forecasts.
The report, The Crisis in Local Government Pensions in the United States, warns that mounting liabilities threaten "the ability of state and local governments to operate."
The study examines 77 of the largest municipal defined-benefit pension plans, covering 2 million public employees and retirees, roughly two-thirds of the nation's total. The estimated liability of all municipal retirement funds is $574 billion, according to economists Joshua Rauh of the Kellogg School of Management at Northwestern University and Robert Novy-Marx of the University of Rochester.
"The fact that there is such a large burden of public employee pensions concentrated in urban metropolitan areas threatens the long-run economic viability of these cities, as residents can potentially move elsewhere to escape the situation," wrote Rauh and Novy-Marx.
Philadelphia will be the first to run out of money from existing assets. Rauh said the "day of reckoning" for that city and others may arrive sooner if pension funds do not earn the anticipated 8% return on equity that most funds hope for.
Mayor Michael Nutter said last month that he plans to end the city's defined-benefit retirement system, which promises a set level of pension payments to retiring employees based on their pay and length of time on the job.
The study calculates that by 2015, Philadelphia's expected pension-benefit payments will compose 19% of the city's anticipated revenue. In Boston, benefits will consume 27% of 2019 revenues. And in Chicago, promises will gobble up 53% in 2019.
Six large cities are listed as most vulnerable--Philadelphia; Boston; Chicago; Cincinnati; Jacksonville, Fla.; and St. Paul, Minn.--because they are projected to run out of money from existing assets no later than 2020. Another 36 cities and counties are projected to be in similar trouble by 2030.
As the financial problems deepen, political pressure will build for a government bailout, first with cities going to states for help, followed by states going to Washington, Rauh predicted.