CHICAGO PENSION FACT SHEET

STATISTICS ON CHICAGOS PENSION SYSTEMS All total, the five funds below hold the retirement life savings of 81,323 active city employees and 56,843 retirees a total of 138,166 people, none of whom receive Social Security. The city estimates that the average retiree pension is just over $40,000. retirement system Chicago Teachers Pension Fund Firemens Annuity & Benefit Fund Policemens Annuity & Benefit Fund Municipal Employees Annuity and Benefit Fund (e.g., health care workers, food/water
safety inspectors, library workers)

active workers 30,366 4,740 12,026 31,326

retirees 22,636 2,821 9,035 19,614

average annuity $46,440 $64,860 $56,892 $33,423

funded ratio 53.9% 24.4% 31.3% 37.2%

Laborers Annuity & Benefit Fund (e.g., street

and sanitation workers)

2,865

2,737

$42,688

55.4%

WHY ARE SYSTEMS UNDERFUNDED? Chicagos pension systems are diverse, but all suffer from essentially the same core problems. Deliberate, Drastic Underfunding by Politicians: All systems have been deliberately underfunded by politicians through inadequate employer contributions. This has led to large, upcoming cliff payments for the teachers, police, and fire systems, meant to pay off the pension debt accumulated from underfunding. In some cases, politicians purposefully made little to no contributions to the system for the better part of a decade. As an example, this unwise underfunding drove down the Chicago Teachers Pension Funds previously healthy funded ratio of 100% in 2001 to 54% in 2012. Employer Contributions Not Based on Actuarial Science: The municipal and laborers funds still feature an artificial employer funding formula based on a multiplier. The multiplier has no relation to actuarial science that governs normal pension funding. The other three funds also used this multiplier method for decades. This leads to underfunding by design.

The Great Recession Brought on by Wall Street: Big banks and corporate CEOs on Wall Street crashed the economy in the mid-to-late 2000s, hurting already-weak pension funding levels. Now, many of these same big business leaders want to slash modest city pensions averaging around $40,000 -- even as the corporate elite plan to retire on sixand seven-figure pensions. Benefits Are Not the Problem: A commission assembled under the former Daley Administration found that the City of Chicagos pension benefit levels are comparable to those of other cities, with the public safety funds at the low end and public service funds near the average. It also fund that current benefits are not, in themselves, unaffordable and did not recommend cutting benefits for current employees because of uncertain legality and fairness. Slashing pension benefits alone is unfair, unconstitutional pension theft and will not fix the problem.

WHO STANDS TO BENEFIT FROM PENSION REFORM? Wall Street: Wall Street is angling to further benefit on the backs of public sector workers. The same bankers and billionaires now rallying to destroy defined-benefit plans and push all workers into 401(k) plans also charged millions in fees for managing investments for public pensions. In Rhode Islands recent attack on pensions, the money saved from gutting retiree income went to fees for Wall Street to manage the pension investments in high-risk hedge funds; Wall Street won, but retirement security is jeopardized.

HOW CAN UNDERFUNDING BE ADDRESSED FAIRLY AND LEGALLY? New Revenue Must Be Part of the Solution: Even the Daley commission admitted that the City of Chicago will have to increase the amount it contributes. It states that the City of Chicago will have to contribute more, implying that new, enhanced revenues are necessary. It will take a serious commitment of new revenue to pay down the pension debt owed to teachers, police, nurses, fire fighters, and other public employees and retirees. We Stand Ready to Work Together: The voices of working and retired men and women should be at the table when decisions are made about their retirement life-savings. We stand ready to work constructively toward a solution that is fair, constitutional, and fixes the real problem a lack of revenue and chronically underfunded pension payments.