Mendoza Warns Chicago Pensions Risk Insolvency at 28.1% Funding

2 articles · Updated · Financial Times · Jul 10

Chicago’s four city pension funds were only 28.1% funded last year, and Susana Mendoza said a market correction could push some into outright insolvency.
Decades of shorted city contributions left tens of billions in unfunded liabilities, and Mendoza said even years of strong stock gains failed to repair the system’s balance sheet.
An Illinois law passed last year could deepen the strain by cutting funded ratios for police and firefighter plans to 18% from about 25%, according to city estimates.
Mendoza, running in Chicago’s 2027 mayoral race, opposes further benefit increases and backs voluntary buyouts, surplus revenue for pensions and a larger rainy-day fund.
Chicago’s crisis is being watched nationally as 76 state and local retirement systems were below 75% funded last year, underscoring broader stress in US public pensions.

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Financial Times7h ago

Susana Mendoza Warns Chicago Pension System Faces Insolvency Risk

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Is Chicago's pension crisis a result of the city's broken promises or benefits that are simply unsustainable?

New York's pensions are stable. What key lessons can Chicago learn to avert its own financial collapse?

Chicago’s $53 Billion Pension Crisis: Causes, Consequences, and the Urgent Need for Reform in 2026

Overview

Chicago’s public pension funds face a critical financial crisis as of mid-2026. While officials highlight recent progress and claim the funds are 'solid' on a cash basis, deeper problems remain. A new law in 2025 aimed to fix severe cuts from the 2010 Tier II system, which had left some workers’ retirement benefits below federal standards. However, restoring more generous benefits for public safety workers has added pressure to the city’s already strained finances. Despite effective management of what the city controls, these legislative changes and long-standing underfunding have left Chicago’s pension system at a crossroads, demanding urgent and sustainable solutions.

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