RTA tightens pension rules in wake of Pagano mess

Regional Transportation Authority directors on Thursday tightened controls over the agency's pension plan to prevent any hanky-panky leading to super-sized payouts.

The change results from an audit by McGladrey & Pullen that found structural weaknesses in the pension plan after the firm analyzed abuses of power at Metra under former Executive Director Phil Pagano. Pagano committed suicide this May in the midst of revelations he received at least $475,000 in unauthorized vacation payments.

The reforms go into effect Jan. 1 and will stop cases of “pension spiking,” Acting RTA Executive Director Joe Costello said. Pension spiking involves inordinate salary increases or bonuses at the end of an employee's career that could result in artificially high retirement benefits.

Pagano, 60, received a number of irregular vacation and sick time payouts and also a generous incentive bonus of more than $800,000 in his last years at the agency. The Crystal Lake resident had worked at Metra since 1984.

His widow now is receiving his pension, which totals about $80,000 a year although the couple would have been eligible for double that amount.

RTA officials said the payment was calculated using Pagano's base salary without the improper perks. The benefit became effective in June.

The pension plan includes RTA, Pace and Metra employees.

Some of the new provisions include: calculating pensions using base salaries, capping final earnings used to figure pension payments at 115 percent of the second- and third-highest income years, denying pensions to people convicted of a felony related to working at the RTA, Metra or Pace.

Authorities were investigating financial misconduct involving Pagano and had he been convicted of a felony, he and his family would not have been eligible for a pension similar to the situation facing former Gov. George Ryan and his wife. The Illinois Supreme Court stripped Ryan of pension benefits after his corruption conviction.