Illinois’ pension bonanza: invest $166K, take home $5.5M

Being in the top 10 of Illinois’ five statewide pension systems is an investor’s dream and a taxpayer’s nightmare. The median investment is shy of $166,000, but the estimated lifetime payout is $5.5 million.

It’s good to be in the top 10 of an Illinois state pension plan: median contribution, $165,852; median lifetime payout, $5.5 million.

The top 10 pensioners in each of its five statewide systems has already received a median state pension worth $3.88 million since retiring. They are predicted to each collect about $1.62 million more during their lifetimes.

They only contributed a median $165,852, including employer contributions, towards their state-guaranteed retirement during 30 years of working.

Their median payout in 2022 was $227,777. That means they received more in one year than was contributed towards their retirements during three decades on the job.

Your retirement is likely to look very different. The typical American saved just $164,000 for their own retirement by retirement age and only collecting $21,310 a year in Social Security benefits.

Cathy Stuehmeier is preparing to retire after a 57-year career in radio and print media in Southern Illinois. The independent newspaper owner said paying for these pensions through higher state taxes has been slowly crippling businesses like hers.

“The taxes we pay in Southern Illinois are insane. Small businesses are the backbone of this country and our economy. But what’s happening is they’re being horribly crippled by property taxes, and state taxes in general,” Stuehmeier said.

“I don’t have a problem paying something for pensions. I believe if the government promises a state worker a retirement, they should fulfill that promise,” she said. “What I have a problem with is how expensive pensions have become and the debt it has created for Illinois.”

Workers who spend their careers working for Illinois collect the third-most generous retirement benefits in the nation. But the top 10 pensioners in each system earn more than double the median lifetime payout of these career pensioners.

The No. 1 pensioner in the state is a former University of Illinois - Chicago surgical oncologist, Dr. Tapas Das Gupta. He has received more than $8.3 million since retiring in 2004 after contributions of $475,331 during his career.

Former Elgin School District 46 Superintendent Marvin Edwards contributed just $63,527 to his retirement. He’s collected $4.5 million since 2002.

Eighteen of the top pensioners qualified for the top 5% of all income earners in Illinois, collecting more than $271,049 a year. They also retired at age 59.

“We should be looking at how to restructure things so we’re not promising so much to new workers and make them more responsible,” Stuehmeier said.

“I don’t worry so much about me. I’m way past retirement age. What I worry about are my children and their children,” she said. “If we keep doing what we are doing, the state won’t be able to pay the people who have worked 30 years in the government the pensions they were promised.”

Illinois is home to the nation’s worst pension crisis. It cost each household $2,765 in 2021 – the third most in the nation and $1,305 more than the typical American paid for public employees’ retirements, according to census data.

Patricia Jonikatis is a retired Chicago Public Schools teacher and lifelong Chicagoan. She spent more than 24 years teaching. She said it seems inequitable that some top pensioners pay as little as $63,527 to make millions.

“You’d like to see the equity in it. The system should be a balanced equation, in the sense that what you put in, you should be getting out and then some,” Jonikatis said. “But nothing over the top. A $5-million-plus retirement is ridiculous.”

“I hear the concerns about housing costs and taxes from people in areas that aren’t as affluent as where I live. I don’t think raising taxes on them is the answer,” she said. “But raising taxes on those people who have worked and put into the system isn’t right, either.”

Polling shows a majority of Illinois voters want pension reform today to lower the state’s nation-leading tax burden.

And because the Illinois Supreme Court rejected lawmaners’ bipartisan reforms attempted in 2013, it will take a statewide vote and change to the Illinois Constitution to fix public pensions.

A “hold harmless” pension reform plan similar to one originally developed by the Illinois Policy Institute and based loosely on those 2013 lawmaker reforms could help to eliminate the state’s unfunded pension liability that continuously threatens taxpayers. It could also let government get back to serving constituents and doing the work people expect for their taxes.

Previous analysis showed changes such as setting a limit to how high a salary can go before pensions are limited, replacing compounding 3% annual raises with true cost-of-living increases, and adjustments to realign benefits with historical inflation rates would have saved more than $50 billion by 2045. It would also get the state’s pensions to 100% funding to fully secure retirements.

“They deserve to collect the pensions they’ve been promised. If we want to stop the state from going bankrupt in the future, we need reform today,” Stuehmeier said.

“People are leaving in record numbers, and I think that taxes are driving them out,” she said. “I know we’re considering buying something in Arkansas. If you want to know why, check their tax rate. The difference is night and day.”

Former Chicago Mayor Lori Lightfoot acknowledged the damage to our communities resulting from runaway pension costs in January 2023. Like her predecessor, she strongly urged Springfield to make changes to stop pensions from eating budgets and hurting government services. Lightfoot wasn’t the only municipal leader to echo the call.

Springfield politicians have quietly jeopardized the retirements of state employees for too long by granting union bosses demands for generous retirements that taxpayers cannot afford.

Special-interest politics have created an unfair and unsustainable system that is hurting government’s ability to do its basic job. Illinoisans overwhelmingly are asking that it end.