Chicago Mayor Brandon Johnson’s eventual pension payout could exceed $5M

Chicago Mayor Brandon Johnson’s pensions are worth an estimated $3.8 million after only four years as a teacher and one term as mayor. It could go even higher, depending on his next job moves.

Chicago Mayor Brandon Johnson is currently set to receive a pension worth an estimated $3.8 million through the Chicago Teachers’ Pension Fund and the Municipal Employees Annuity and Benefit Fund.

He qualifies for these benefits thanks to multiple loopholes in the state’s pension code. His pension payout could ultimately be worth far more – maybe $5.53 million – by further leveraging these loopholes after four years in a classroom and his first term as mayor.

Scenario 1: $1.1 million

Johnson was previously employed as a teacher at Chicago Public Schools, where he was a Tier 1 participant in the Chicago Teachers’ Pension Fund. Johnson was a social studies teacher for only four fiscal years, from 2008-2011, according to data from the Illinois State Board of Education. Then he went on to work for the Chicago Teachers Union as a paid activist.

Because of a loophole in Illinois’ pension code, Johnson appears to have been allowed to continue to participate in the Chicago teachers pension, even though he was no longer a school employee, according to findings from a Freedom of Information Act request submitted by the Illinois Policy Institute. Normally, teachers must work at Chicago Public Schools for five years to become eligible to retire with a pension.

The Illinois Pension Code allows Johnson to continue to accumulate creditable service towards his pension as a result of his employment with CTU, because he was a participant in the teachers pension system prior to 2012. This loophole has since been closed for those who began participating in the pension system after Jan. 5, 2012.

As a CTU employee, Johnson has received an additional 12 years of service credit with the pension system – enough time to become eligible to receive a pension in retirement. Johnson’s retirement benefit from the teachers system will likely be based on his union salary, which has averaged nearly $90,000 annually during the past four years. He earned an average of less than $58,000 during his four years of teaching.

Johnson’s current service credits with the teachers pension make him eligible to retire at age 62 with full benefits. If he does so, he would be expected to receive nearly $1.1 million in pension payments during retirement.

Scenario 2: $3.8 million

Since Johnson became mayor in 2023, he has been a participant in the Municipal Employees Annuity and Benefit Fund as an employee of the city of Chicago, according to information from a Freedom of Information Act request submitted by the Illinois Policy Institute. This will allow him to accumulate four years of creditable service during his first term as mayor, substantially increasing his future pension.

While city employees normally must work at least 10 years before being eligible for a full retirement from the city, Johnson will be able to parlay these four years with his creditable service from the Chicago Teachers’ Pension Fund thanks to the Illinois Retirement Systems Reciprocal Act. The reciprocal act gives retiring Illinois public employees the option to receive a pension based on the combined service credit earned within eligible retirement systems. Often it allows a larger pension payout and for the person to collect a pension earlier than if they had to retire independently from funds.

Using the reciprocal act, Johnson will have 20 years of total service – making him eligible to retire with payments from both systems by age 60. Not only will Johnson be able to retire earlier, but he will also be allowed to calculate his pension payments based on his final average salary as mayor instead of his salary as a CTU employee, substantially increasing his benefits. By the end of his term, Johnson will have accumulated a pension benefit worth an estimated $3.8 million, which he can begin collecting at age 60.

Scenario 3: $5.5 million

But the benefits don’t stop there. Johnson could enrich himself even more if he were to attempt to leverage these loopholes even more. In an extreme scenario, if Johnson were to serve at least three terms as mayor, he would have enough years of service with the city fund to retire independently from that system. However, he would still be four years away from being able to collect his teacher pension, because he would be about 58 years old at the time.

So, he could resume his work for the Chicago Teachers Union to gather four more years of service in the teachers system and increase his pension payout further. In this scenario, while Johnson would qualify for an independent retirement from both the city and teachers funds, he would be able to utilize the reciprocal act to substantially increase his pension benefits. Rather than retiring independently from each system, which would give Johnson an estimated lifetime benefit of $3.5 million, he could retire from both using reciprocity and base his payout on his highest final average salary as mayor. That would boost his pension payout to an estimated $5.5 million based on his current salary.

The Chicago Teachers’ Pension Fund currently has $14 billion worth of unfunded liabilities and a funded ratio of 48%. The Municipal Employees Annuity and Benefit Fund has $14.7 billion in unfunded liabilities and a funded ratio of 22.2% – next-to-worst local system in the nation.

In total, Illinois has more than $212 billion in unfunded state and local pension debt, though independent ratings agencies such as Moody’s Investor Services have long estimated the figure to be much larger. These debts are also affecting Chicago’s budget, where pensions now consume 23% of net appropriations and drive annual budget shortfalls.

Fixing Illinois’ broken pension system and protecting retirees and taxpayers will require constitutional pension reform. Former Mayor Rahm Emmanuel and former Mayor Lori Lightfoot both called on state lawmakers to pursue constitutional pension reform at the end of their terms. Mayor Brandon Johnson should leverage his position to lobby state lawmakers to pursue these reforms, rather than cash in on the flaws.