Illinois six-figure pensions grow 74% since 2015
Four years ago, 12,524 retirees were receiving more than $100,000 each in annual public pension benefits from six Illinois retirement plans.
Now, that number is 21,794, a 74% increase in the number of recipients of six-figure public pensions in Illinois.
Of those, 17 will receive pensions of more than $300,000 apiece this year, including 10 former suburban school superintendents. A 3% compounded cost-of-living raise automatically will add $9,000-plus to each of those pensions next year.
The six-figure annual pensions go to 5.6 percent of retirees covered under the General Assembly Retirement System, Illinois Municipal Retirement Fund, Illinois Judges' Retirement System, State Employees' Retirement System, State Universities Retirement System and Illinois Teachers' Retirement System, according to a Daily Herald analysis of the pension funds' financial reports received through several public records requests. The analysis does not include pensioners who might be receiving combined payouts over $100,000 from multiple funds.
Such benefits are far higher than the average public pension of about $36,000 a year across the six Illinois pension systems. But the number of $100,000-plus pensions will continue to grow, while Illinois struggles with a $134 billion unfunded pension liability brought about by years of underfunding by state lawmakers.
“This is what happens when there are no limits on the size and growth of your pension,” said Laurence Msall, head of the Civic Federation, a nonpartisan government research organization that specializes in Illinois tax and financial policy. “The current situation is unsustainable and unjustifiable.”
The increase in six-figure pensions at TRS, the fund for public school teachers and administrators, reflects rising salaries during beneficiaries' careers and their length of time on the job, spokesman Dave Urbanek said. The average salary for teachers and administrators in the retirement fund is $73,000. The average TRS pension recipient has worked 25 years, and benefits max out after 35 years of employment.
At TRS, 11% of pension recipients receive annual benefits over $100,000, 84% more than four years ago. Most TRS beneficiaries don't receive Social Security in retirement, though most other public sector retirees do.
Elsewhere, 73% of the 1,233 judicial pensions exceed $100,000, up 27% from 2015.
More than 14% of the 429 legislative pensions exceed $100,000, up 32% from 2015.
Annual benefits over $100,000 make up 8% of state university pensions, 2% of state employee pensions and less than 1% of municipal worker pensions.
Critics blame the growth of pensions on uncapped benefits and automatic cost-of-living raises that outpace inflation. A 3% compounded cost-of-living increase, the standard in all of the pension systems except IMRF, raises a $50,000 annual pension to $67,196 in a decade. IMRF recipients get a 3% annual increase, but it's not compounded.
Public employees can retire with full benefits after 20 to 40 years on the job, depending on the pension system, and the maximum starting pension ranges from 75 percent of a person's four-year salary average to 80 percent of a person's final monthly earnings.
In 2011, the state implemented a second tier of retirement benefits for new hires, who have to work longer to be vested, live longer to collect and have a cap on earnings that can count toward their pensions, which is $114,952 this year. But it will be years before those employees reach retirement.
Other attempts to curtail public pension costs have been stymied by court rulings regarding an Illinois Constitution provision that pension benefits “shall not be diminished or impaired.” But constitutional amendments face obstacles to passage, needing approval by the General Assembly, which has been reluctant to address pensions, and by voters.
“We should get rid of the constitutional limitation that doesn't allow for changing benefits,” Msall said, arguing that lawmakers — who just approved a graduated income tax with higher rates on higher income — also should tax retirement benefits. Illinois is one of just three states that don't do so.
Government finance watchdogs have long been concerned about the growing unfunded liabilities in the pension systems. It affects the state's borrowing power, making it costlier to get loans. “The failure to stabilize pensions, consolidate services and get rid of excess inefficiencies ... puts these funds and the governments that are underneath them in great financial peril,” Msall said.
Gov. J.B. Pritzker convened a task force in January to look into potential pension changes, but the group has yet to make any recommendations.
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