Chicago’s four pension funds lost an estimated nearly $1 billion in the market rout sparked by President Donald Trump’s tariffs, dealing a blow to the city’s retirement plan, which is among the least funded of any major U.S. city.
While the 25 largest state and local pension systems have lost billions of dollars this year, the recession has hit those tied to Chicago and its school district particularly hard because they have been underfunded for decades, according to the Equable Institute, a Washington, D.C.-based nonprofit that compiles the loss estimates.
Net pension liabilities for the four New York City pension funds, which pay into the city, rose about 5% to $37.2 billion as of Dec. 31, 2023, according to the city’s most recent annual financial report. The institute’s analysis did not include the city’s labor fund.
“For most state/local pension plans, this 7-8% portfolio loss is worrisome,” Anthony Randazzo, executive director of the Equable Institute, said in a post on social media on Monday. “For Chicago’s chronically underfunded pensions, this is bordering on disaster,” he said.
The Chicago Teachers’ Pension Fund, which gets its money from the Chicago Public Schools District and the state of Illinois, lost $593.6 million in seven trading days between April 2 and April 11, according to the institute’s report. Losses across all asset classes for the three city-funded pension systems, which serve former city employees, police officers and firefighters, were estimated at $344.6 million as of Friday’s close.
The Equable Institute report comes as the S&P 500 has seen wild swings in recent days and a sharp drop in investment returns. Volatility surged after Trump imposed new tariffs on imports from several countries, causing the S&P 500 to close down 15% on April 8, but it was able to give back gains two days later when Trump announced that many tariffs would be extended for 90 days. The S&P 500 is still down about 9% year to date, with other markets also falling.
Carlton W. Lenoir Sr., executive director of the Chicago Teachers’ Retirement Fund (CTPF), downplayed the losses. “The current market volatility will have no immediate impact on CTPF’s funding situation,” he said in an emailed statement. “CTPF is prudently invested in a diversified portfolio designed to withstand market volatility over the long term, even in uncertain times.”
Annette Guzman, Chicago’s budget director, declined to comment, while other pension funds did not immediately respond.
However, the large losses make it harder for these funds to increase their funding levels.
“With minimal cushion against investment losses, any market downturn is life-or-death,” Randazzo said, citing the Chicago police pension as an example. The plan already has a thin profit margin, similar to a pay-as-you-go plan, and the city’s municipal employee pension fund’s own stress tests showed that “a multi-year bear market could trigger a fiscal death spiral,” he said.
