State retirees get nearly 40% more than what working Illinoisans earn

The typical career state worker collected $82,478 in annual pension benefits, recouping more income in 17 months of retirement than they contributed over 35 years. Working Illinoisans only earned $59,650 a year.

The typical career government worker in Illinois collects nearly 40% more from a state pension system than the typical Illinoisan earns working.

Illinois retirement systems data shows the median career pensioner drew an annual payment of $82,478 from the state in 2021. The typical Illinoisan only earned $59,650 working.

The retirement payout these pensioners received within 17 months of leaving the workforce was worth more than the $113,362 they contributed towards their own retirements over 35 years of public service, state data shows. For that $113,362 investment, the state will pay them about $2.42 million.

Cathy Stuehmeier is preparing to retire after a 57-year career in radio and print media in Southern Illinois. The independent newspaper owner said she believes raising taxes to pay pension debt is driving Illinoisans out of the state.

“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. What I have a problem with is how expensive pensions have become and the debt it has created for Illinois,” Stuehmeier said.

Illinois now owes nearly $140 billion more than it has to meet what has been promised to those depending on its five statewide systems, by the state’s accounting. When Moody’s Investors Service looked at Illinois’ pension debt using more real-world assumptions, it calculated the state owes $313 billion in pension debt. Pick a number, but either one will be mostly borne by future taxpayers.

That $2.42 million a state worker will collect is more than 14 times what the typical American has saved at retirement age. State worker contributions will only cover about 4.5% of the benefits the pension systems guarantee.

Paying the difference for state pensions cost each Illinois household $1,981 in 2021 – $853 more than the average U.S. household.

Government employees aren’t to blame for taking part in a lucrative retirement system. Public servants deserve to collect the pensions they have been promised.

Politicians trading generous pension benefits in return for support that neither the state nor Illinoisans can afford are the true threat. The long-term solvency of the pension systems upon which 240,010 Illinoisans currently rely is at risk.

Illinois’ state pension systems had just 44 cents for every dollar promised to state retirees, a state report for fiscal year 2022 showed. Experts warn pensions with funding ratios below 60% are “deeply troubled” and below 40% are likely past the point of no return, meaning insolvency and the need for a major taxpayer rescue.

“I’ve got a sister who taught and now earns a pension, I would hate to see her lose her retirement,” Stuehmeier said. “She spent 35 years in a classroom, giving it her all and that’s what she lives on. It would be devastating to lose it just because the state can’t pay what it promised.”

Numerous reports have pointed to Illinois’ generous pension benefits, at No. 3 in the nation, as crowding out core government services and driving the state’s nation-leading tax burden. Still, lawmakers ignore calls to change the Illinois Constitution to allow for control of the future growth in government pensions.

A supermajority of Democratic and Republican voters in Illinois want pension reform, polling shows. That has been disregarded by Springfield politicians. The appearance is lawmakers are more concerned with serving special interests than the public good.

“Small businesses are the backbone of this country and the economy but they’re being horribly crippled by property taxes, by state taxes in general. It’s not realistic,” Stuehmeier said. “You can’t rob Peter to pay Paul and come out winning.”

Putting a referendum on the ballot to vote on constitutional pension reform would give taxpayers a voice in the state’s No. 1 fiscal problem – the issue that is damaging state services to its most vulnerable, hurting its future by robbing from education and raising everyone’s taxes.

Chicago Mayor Lori Lightfoot just acknowledged the damage to our communities resulting from runaway pension costs. Like her predecessor, she now is strongly asking Springfield to make changes to stop pensions from eating budgets and hurting government services.

A “hold harmless” pension reform plan such as one developed by the Illinois Policy Institute – based loosely on bipartisan 2013 reforms – could help eliminate the state’s unfunded pension liability and achieve retirement security for pensioners. The 2013 reforms were rejected by the Illinois Supreme Court, which is why reform requires a change to the Illinois Constitution.

By tying pension cost-of-living adjustments to inflation rather than a fixed rate of annual growth, the reforms would save the state more than $50 billion by 2045. It would also increase required government contributions to fund 100% of promised pensions rather than the current 90% target.

“I don’t worry so much about me. I’m way past retirement age. What I worry about are my children and their children,” Stuehmeier 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.”

“If we want to stop the state from going bankrupt in the future, we need reform today.”