Pension Funding

CTPF Response to Story in the Chicago Tribune
News

With the recent release of the Chicago
Tribune
 editorial and story
, CTPF has been
receiving messages from members concerned about their pensions.
CTPF has a stable funding plan which will bring our funded ratio
up from the current 50.1% to 90.0% by 2059. Pensions for CTPF
members are guaranteed, and CTPF has never missed a pension
payment.

The Tribune highlights recent changes in the actuarial
assumptions used to calculate payments owed to CTPF — changes
which lower the investment rate assumptions from 7.75% to 7.25%.
These changes, recommended by the State of Illinois actuary, mean
that the Fund’s Trustees are taking a more conservative approach
to ensure that the Employer makes adequate payments. CTPF
Trustees have a stable, conservative, and responsible investment
plan in place to ensure the strongest stewardship of public
funds. Additionally, our track record is excellent – as a
long-term investor, CTPF has returned 8.7% over the past 35
years, exceeding our expected return of 7.25%.

The shortfall in CTPF funding stems from long-term policies which
failed to provide adequate revenue for our Fund. Illinois law
specifies that funding for pensions shall be a combination of
employer contributions, state appropriations, employee
contributions, and earnings on investments. A funding crisis at
the Chicago Public Schools in the mid-1990s changed the structure
of pension funding and eliminated the tax levy and employer
contributions for nearly a decade. This pension “holiday” from
1996-2005 cost CTPF more than $2 billion in funding. Additional
legislation passed in 2010 granted the Employer an additional
$1.2 billion in relief. During this same period, the State did
not uphold its commitment to CTPF.

Lacking revenue and the opportunity to invest that revenue,
CTPF’s funded ratio fell from 100.8% in 1999 to 49.5% in 2013.
Decades of protest by CTPF members and a funded ratio below 50%
demonstrated the critical need for change. Legislation passed in
2016 and 2017 reestablished the tax levy, established the State’s
obligation to fund the normal cost of Chicago’s teacher pensions,
and provided funding to offset the cost of retiree health
insurance. These changes help to correct mistakes of the past,
and have set CTPF on a stable and sustainable path for the
future.

CTPF is currently receiving the required funding to reach its
target of being 90% funded by the year 2059.

Pensions provide secure and stable retirements for teachers,
administrators, and public school personnel, and provide an
economic engine for the City of Chicago and State of Illinois.
Find additional financial information about the Fund in
our .

For more information on CTPF’s funding history,
see .

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