Chicago Pension Buyout Program Unlikely to Solve Crisis

Experts warn DROP program won't fix city's pension woes

Mar. 30, 2026 at 12:54am

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A new buyout program for Chicago's pension system, modeled after a similar state-level initiative, is unlikely to provide a long-term solution to the city's pension crisis, according to actuarial analysis. Experts caution that the program's potential benefits have been exaggerated and the underlying financial analysis is flawed.

Why it matters

Chicago's pension liabilities have grown to unsustainable levels, putting significant strain on the city's budget. While buyout programs may provide temporary relief, they do not address the core structural issues driving the pension crisis. Experts warn that unrealistic expectations around these programs could distract from the difficult decisions needed to put Chicago's pensions on a path to solvency.

The details

The city is launching a Deferred Retirement Option Program (DROP) that would allow some public workers to receive a lump-sum payment upon retirement in exchange for forfeiting future pension payments. However, actuarial analysis by Mary Pat Campbell suggests the program's potential benefits have been exaggerated and the underlying financial assumptions are flawed.

  • The state's existing buyout program for its own pensions is the precedent for Chicago's new DROP program.
  • Chicago is launching the new Deferred Retirement Option Program (DROP) in 2026.

The players

Mary Pat Campbell

An actuary who has analyzed the financial assumptions behind Chicago's new pension buyout program.

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What they’re saying

“The state's existing buyout program for its own pensions is the precedent for Chicago, which should be a warning: Look out for similar exaggerated claims and shoddy analysis.”

— Mary Pat Campbell, Actuary

What’s next

Experts recommend that Chicago officials closely scrutinize the financial assumptions and potential long-term impacts of the new pension buyout program before implementation.

The takeaway

While pension buyout programs may provide temporary relief, they do not address the fundamental structural issues driving Chicago's pension crisis. Unrealistic expectations around these programs could distract from the difficult decisions needed to put the city's pensions on a sustainable path.