K-12 tax & $pending climate: Chicago’s pension crisis

By: Nick Binotti and Ted Dabrowski

Chicago’s pension shortfall across the city’s four major retirement funds – Municipal, Laborers, Police and Fire – rose to $37.2 billion total in 2023. That’s a 5% increase from $35.4 billion reported the prior year. Most of the increase is attributed to changes in actuarial assumptions and recent legislation that sweetened the cost-of-living pension benefit for thousands of police and firefighters.

Add in the Teachers Pension Fund’s $15.8 billion shortfall and Chicagoans are on the hook for $53 billion in unfunded pension liabilities. That’s over $45,000 owed per Chicago household to be paid off over time.

The Chicago teachers and municipal pension funds have the highest unfunded liabilities with both just under $16 billion. The police pension fund is next with nearly $14 billion. The fire and laborers pension systems have unfunded liabilities of $5.7 billion and $1.9 billion, respectively.

Chicago’s five largest systems are only 30% funded collectively. Only the Chicago Teachers Pension Fund has a funding ratio above 40%. Chicago’s municipal, police and fire pension systems each have funding ratios around only 22%, among the worst in the country for major pension funds.