In the wake of Tuesday's presidential debate, much attention is focused on President Barack Obama's pension from his time as an Illinois state lawmaker.
While the amount in retirement dollars he would be scheduled receive from state is comparably modest compared to the pensions now afforded former U.S. presidents, it does show that Illinois officials have provided themselves with comfortable retirements with far better investment returns than they could receive if working in the private sector.
Obama's service as an Illinois state senator is estimated to earn him a $15,270 starting annual pension upon retirement. His initial monthly benefit would be $1,272. To put this in perspective, an ordinary citizen would need $332,091 (for men) or $367,577 (for women) in cash at the same retirement age to yield the same annual income as Obama's estimated state pension.
After accounting for a 3 percent annual compounded cost-of-living adjustment and life expectancies, Obama could be in line to receive a total pension payout during his lifetime of $383,535. Obama served as state lawmaker just shy of 8 years.
Members of the Illinois General Assembly Retirement System, or GARS, contribute 11.5 percent of salary to the pension system. The estimated total amount Obama would have contributed as an employee toward his pension was $55,076.*
"This is absolutely ridiculous. He could get a far greater return than someone in the private sector could ever expect to receive. And if he had worked as an ordinary state worker, he wouldn't have been eligible for a dime in pension payments. Illinois lawmakers have done a good job of feathering their own nests – at the taxpayers' expense," said Kristina Rasmussen, executive vice president of the Illinois Policy Institute.
The starting pension and cash value estimates were calculated using the Illinois Policy Institute's online pension calculator. Here are the assumptions this calculation is based upon:
A target retirement age of 62.
A full-year salary of $66,389.88 in 2003, his last full-year in the legislature.
A hire date of January 8, 1997 and a termination date of November 4, 2004.
If the president's service to the state had been as a rank-and-file state worker, he wouldn't receive a pension at all. They are required to have a minimum of eight years of service before they are eligible to receive anything.
But Illinois lawmakers created different rules for themselves. Only four years of service in the legislature is required for lawmakers to retire at age 62. And they can retire at age 55 if they have 8 years of service in the General Assembly.
This year Illinois taxpayers will contribute $14.15 million to the General Assembly Retirement System. Under new accounting rules from Moody's, the Illinois legislature's pension system is only 13 percent funded.
In addition, Obama would be eligible for free retiree health care funded by Illinois taxpayers after having served 4 years in office.
*The total amount of President Obama's pension contributions is an estimate based on his salary history as reported by the Comptroller and based on the contributions required under the Illinois Pension Code. The Institute has filed a Freedom of Information Act request with the state to verify these estimates.
Estimated lifetime payout reflects the total amount of pension payouts over the course of the annuitant's life, with mortality based upon the Social Security Administration's actuarial life tables for a 62-year-old retiree. Annual pension payouts were adjusted for a 3 percent compounded cost-of-living adjustment.