Illinois Senate Clears Pension Buyout Bill for Chicago's $36 Billion Liability
Updated
Updated · Chicago Tribune · May 28
Illinois Senate Clears Pension Buyout Bill for Chicago's $36 Billion Liability
1 articles · Updated · Chicago Tribune · May 28
Senate Bill 3404 would let Chicago and other Illinois local governments offer voluntary lump-sum pension buyouts to retirees and former employees with vested benefits.
Chicago's four pension funds are only 26% funded and carry roughly $36 billion in unfunded liabilities, while pension contributions already consume about 17% of the city budget and 76% of property-tax revenue.
If Chicago adopts the program and participation matches state-level buyouts launched in 2018, the Civic Committee projects about $760 million in lower required contributions through the plans' target years and an immediate $270 million liability reduction.
The bill still needs Illinois House approval and the governor's signature, with supporters arguing it would ease budget pressure and signal to investors and rating agencies that Chicago is tackling pension debt.
Could the pension plan backfire by overpaying retirees with shorter life expectancies?
Will this pension fix stop the city's property tax burden from crushing homeowners?
Chicago’s $35 Billion Pension Crisis: New Benefit Hikes, Buyouts, and the Race Against Insolvency
Overview
Chicago’s pension crisis has deepened following the signing of House Bill 3657 by Governor Pritzker on August 1, 2025. This law restored Tier-1 style benefits for employees hired after 2011, which is expected to dramatically increase the unfunded liabilities of two of Chicago’s worst-funded pension systems. As a result, their funding levels could drop to as low as 18%, accelerating the risk of insolvency. The bill is projected to add $60 million to the city’s pension costs in 2027 and about $750 million more by 2055, making Chicago’s path to financial stability even more challenging.