The aggregate actuarial funding ratio of 10 Chicago-area pension plans was 45.5% at the end of fiscal year 2012, down from 74.5% in 2003, said a recent report from the Civic Federation, an independent government research organization in Chicago.
The $1.9 billion Chicago Transit Authority Employees Retirement Plan reported the highest actuarial funding ratio at 59.4%, while the $1 billion Chicago Firemen’s Annuity & Benefit Fund reported the lowest at 24.4%.
Aggregate unfunded actuarial accrued liabilities across the 10 pension plans rose to $37.3 billion, up from $11.3 billion in 2003, the report said.
Laurence Msall, president of the Civic Federation, attributed the funding drop to insufficient employer contributions. The “statutorily required contributions (were) far below what the actuaries recommended for stabilizing those funds,” Mr. Msall said in a telephone interview.
In order to meet the pension funds’ annual required employer contribution in fiscal year 2012, employers should have contributed a total of about $2.8 billion to the pension plans, the report found. Instead, they contributed $872.5 million.
Mr. Msall added that the plans’ unfunded liabilities “continue to rise” against a “backdrop of relatively good returns.”
Plans with a Jan. 1 to Dec. 31 fiscal year reported a 13% average return on assets in fiscal year 2012, up from 0.5% in fiscal year 2011. Plans with a July 1 to June 30 fiscal year reported a 0.8% average return in fiscal year 2012, down from 23.9% in fiscal 2011. Investment income accounted for nearly 60% of the pension funds’ income in fiscal year 2012.
The report also highlighted a falling ratio of active employees to beneficiaries.
The ratio of active employees to retirees across the 10 pension funds dropped to 1.11 in fiscal year 2012 from 1.55 in fiscal year 2003, the report found.
Mr. Msall said these numbers should be a wake-up call for the Illinois Legislature and “anyone who cares about these plans. … Waiting to resolve the financial crisis and pass pension reform is … expensive … and dangerous for these plans.”
The report contains data from the $10.8 billion Chicago Public School Teachers’ Pension & Retirement Fund; $8.9 billion Cook County Annuity & Benefit Fund, which includes the Cook County Forest Preserve District Employees’ Annuity & Benefit Fund; $5.3 billion Chicago Municipal Employees’ Annuity & Benefit Fund; $3.1 billion Chicago Policemen’s Annuity & Benefit Fund; $1.9 billion Chicago Transit Authority Employees Retirement Plan; $1.4 billion Chicago Laborers’ Annuity & Benefit Fund; $1.3 billion Chicago Metropolitan Water Reclamation District Retirement Fund; $1 billion Chicago Firemen’s Annuity & Benefit Fund; and $424.5 million Chicago Park Employees’ Annuity & Benefit Fund.