Chicago’s pension burden climbed last year after the city’s retirement funds lost money due to volatile markets, deepening the long-standing fiscal woes for new Mayor Brandon Johnson.
The net pension liability across the city’s four retirement funds rose about 5% to $35.4 billion as of Dec. 31 from $33.7 billion a year earlier, according to Chicago’s annual financial report posted to the city’s website.
The amount the city owes to its four pensions that pay benefits to retired firefighters, police officers, municipal workers and laborers increased “due to the short-term impact of the global market volatility on recognized investment income,” the report said. The city’s four funds range from about 19% to about 40% funded, according to the report. That’s far short of other municipal plans: around the US, funding ratios for the largest public pensions average above 70%.
“While the city still faces several long-term structural challenges, we are charting a better path forward for the city’s finances,” Johnson said in a June 30 letter attached to the report, “that will protect working families and develop actionable solutions to meet the city’s obligations to workers, retirees, and taxpayers.”
Decades of chronic underfunding helped balloon Chicago’s pension liability, weighing on the city’s budget and credit ratings. Recent state-mandated contribution increases helped the city earn rating upgrades in the last year, including one from Moody’s Investors Service in November that allowed it to shed its one junk rating.
Johnson, who took office in May, has set up a pension working group that is charged with finding sustainable solutions to the long-term challenge.
Spokespeople for the city didn’t respond to a request for comment.
