Posted by StreetWise in Latest News
Not many people have part-time jobs that offer pension benefits, and fewer still receive ones as generous as those Illinois lawmakers have provided themselves.
In fact, the retirement benefits Illinois legislators receive are far more generous than what most of their constituents could collect working full-time jobs.
For example, state Rep. Skip Saviano, R-Elmwood Park, is retiring in January after being defeated in the November general election.
Saviano has contributed $146,000 toward his pension during the 20 years he has served in the Legislature. Based on current pension formula for Illinois lawmakers and the Social Security Administration’s life expectancy tables, Saviano can expect to collect $2.5 million in pension benefits.
In fact, the $146,000 he contributed toward his retirement is a real bargain. If he wanted to buy an annuity in the private sector with the same anticipated payout as his public pension, it would cost him $1.7 million. In other words, he is getting a pension at a $1.5 million discount compared with what he could buy in the private sector.
“Public pensions are inherently corrupt because it is the lawmakers deciding what their own pensions will be,” said Frank Keegan, an editor with State Budget Solutions.
In the table included in today’s edition of the Reeder Report, the anticipated pension benefits of the 34 lawmakers leaving the General Assembly in January have been calculated using data collected through the Illinois Freedom of Information Act, or FOIA.
Perhaps not surprisingly, lawmakers are earning far more in taxpayer-subsidized pensions than they could if they invested on their own.
“It’s the taxpayers who are making up the difference here,” Keegan said. “Illinois has one of the most underfunded pensions in the nation and lawmakers have been a driving force behind it. They have filled their own pockets, put a little bit in the pockets of the workers and stuck future generations with the bill.”
While it is true that legislative pensions make up a tiny percentage of the of the overall Illinois pension shortfall, it is important to remember that what lawmakers choose to give themselves sets the tempo for how they treat the other public employee pension systems they oversee, Keegan said.
The state’s unfunded pension liability will exceed $200 billion next year under new public pension accounting standards being implemented.
It is worth noting that lawmakers are not required to participate in the pension system.
Edward Zelinski, a law professor at Cardozo School of Law in New York and a national authority on pensions, called the Illinois legislative pensions “offensive.”
“I can’t say it is the most egregious in the nation, but I can say it is hard to believe there are many – or any – that are more egregious,” he said.
Pensions are a form of covert compensation, Zelinski said.
“If a lawmaker announced that he was going to double his salary, the voters would be outraged and would vote him out of office,” he said. “But if lawmakers essentially do it by increasing their pensions, voters don’t care because they either don’t know about it or don’t understand how pensions work.”
For example, Saviano’s final salary as a lawmaker is $81,953. But for each year he served in the Legislature he accrued about $125,000 in anticipated pension benefits.
“This just offends me,” Zelinski said. “People elect these individuals thinking they are going to make a modest salary and do the public good. In reality, they are doubling their salaries by increasing pensions. This isn’t a Republican or Democratic issue. There is room for bipartisan outrage here.”
As an ongoing service, the Reeder Report will routinely report lawmakers anticipated pension benefits at the time of their retirement.
Written by Scott Reeder,