Chicago Teachers’ Pension Boosted Funded Status in Fiscal 2023

The Chicago Teachers’ Pension Fund announced on January 31 a return of 9.1% for its 2023 fiscal year, which ended June 30, 2023.

The results were released as a part of the fund’s annual comprehensive financial report. The pension fund, the oldest in Illinois, has released this annual report since 1915.

Assets under management increased to $12.1 billion at the end of the fiscal year, an increase from $11.8 billion at the end of fiscal 2022. The fund reported one-, five- and 10-year returns of 9.1%, 7.3% and 8.0%, respectively.

The fund reported the following asset class returns:

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Domestic equity – 18.9%;
International equity – 16.5%;
Infrastructure – 10.6%;
Fixed income – negative 0.3%;
Private equity – negative 1.1%; and
Real estate – negative 4.1%.
The fund allocated 30.5% of its portfolio to domestic equity and another 30.5% to international equity. Fixed income made up 18.7% of the fund, and real estate had an allocation of 11.4%. The rest of the fund was comprised of private equity (8.2%), infrastructure (2.0%), public REITs (0.9%) and cash equivalents (0.0%).

Despite underperforming its benchmark performance of 9.5%, the fund’s annual return was beneficial in boosting the pension’s funded status. The CTPF reported that the funded ratio of the fund increased to 47.2% at the end of the fiscal year, up from 46.8% at the end of fiscal 2022. The funded status remains down from 53.2% in fiscal 2021 its 10-year high of 55.6% in fiscal 2014.

The CTPF, like many Illinois pension funds, is woefully underfunded. In December 2023, the state contributed $6.2 billion to the Teachers’ Retirement System of Illinois, a similar fund for teachers on a state level that does not include Chicago-area educators, which has a funded ratio of 44.8%.

According to the CTPF’s statutory funding policy, the fund projects a 90% funded ratio in the year 2059, which the fund notes is a plan “heavily dependent on the state and board of education contributing the statutory required contributions each year until 2059.”